INTRODUCTION TO LAND LAW
By Law Teacher
THE LAW ESSAY PROFESSIONAL
8.1.1 Freehold and Restrictive Covenants – Introduction
Welcome to the eighth topic in this module guide – Freehold and Restrictive Covenants! A covenant is a promise made in a deed by a covenantor for the benefit of a covenantee. In Introduction to Land law, covenants can burden land and affect the use of it somehow.
Freehold covenants can be varied, and as such they can include a range of different topics.
A restrictive covenant prohibits a covenantor from doing something specific over their land or using their land for a particular purpose. The burden of a restrictive covenant is also capable of ‘running’ with the land. This means that subsequent owners and occupiers of the Introduction to Land law have to abide by the restriction.
Below are some goals and objectives for you to refer to after learning this section.
Goals for this section:
Objectives for this section:
8.1.2 Freehold and Restrictive Covenants Lecture
With leasehold covenants, a covenant regulates the use of land in some way.
The burden of a covenant
The ‘burden’ of a covenant refers to the Introduction to Land law which has the obligation to do, or not to do in the case of restrictive covenants, something. For example, for a covenant to keep the grass short, the owner of that land has the ‘burden’. The ‘running’ of the burden refers to whether a new owner of the Introduction to Land law has to abide by the covenant.
The general rule at common law
The basic rule is that the burden of a covenant in relation to land does not run with the land at common law (Austerberry v Corporation of Oldham(1995)). This follows the basic rules of privity of contract.
Case in focus:Rhone v Stephens [1994]
Circumventing the general rule
- A chain of indemnity covenants.
- To lease the land instead of selling it, and replicate the covenants in the tenancy agreement.
The best way of enforcing a positive covenant is through equity.
The general rule at equity
The leading case of Tulk v Moxhay [1848] created a certain set of circumstances which would result in the burden of a covenant running.
Case in focus: Tulk v Moxhay [1848]
When using the case of Tulk v Moxhay, four requirements must be satisfied.
The covenant must be negative
The test for whether a covenant is negative or not is whether they will have to pay anything to comply with the covenant (Haywood v Brunswick Permanent Benefit Building Society(1881)).
Case in focus: London County Council v Mrs Allen[1914]
The best way to understand this rule is by reference to the London County Council case.
The covenant must touch and concern the dominant land
The covenant must benefit the dominant land. Usually, this test falls down to how far away the dominant land is from the servient land (Kelly v Barrett[1924]).
Case in focus: Newton Abbot Co-operative Society Ltd v Williamson and Treadgold(1952)
The covenant must be made with the intention to burden the servient land
The operation of privity of contract in covenants – binding the original parties
This follows the principles of privity of contract.
Similar to the above exploration of S79, this presumption under S56 can be rebutted (Re Ecclesiastical Commissioners for England’s Conveyance [1936]).
Changes implemented by the Contracts (Rights of Third Parties) Act 1999
Essentially, this piece of legislation removes the requirement that the third party wishing to enforce the benefit of a covenant must be in existence at the time of the covenant.
This only applies to covenants made after 11 May 2000. If so, and one of these requirements are met, a third party may enforce the covenant:
- The covenant expressly states the third party
- The third party is identified by name, a member of a class or a particular description (they do not need to be in existence).
The benefit of a covenant
Benefit of a covenant at common Law
Similar to the burden of covenants, there are four clear requirements:
The covenant must ‘touch and concern’ the land
Similar to the rule on the burden of a covenant, there must be some benefit to the dominant land. The test for whether the covenant touches and concerns the Introduction to Land law was formed in P & A Swift Investments v Combined English Stores Group [1989] AC 632.
The covenantee must hold a legal estate in the land on the date of the covenant
This requirement is fairly straightforward. Simply, the covenantee must hold a recognised legal estate in the Introduction to Land law. This can either be through fee simple absolute in possession or a term of years absolute under S1(1) of the LPA 1925.
The buyer of the land must derive their title from the original covenantee
This test changes dependant on whether the covenant is pre-1926 or post-1926.
The benefit must have been intended to run with the land at the date of the covenant
Again, this requirement is different dependant on whether the covenant is pre or post 1926.
Benefit of a covenant at equity
There are four different ways in which the benefit of a covenant may run in equity. The other three ways are:
- Annexation
- Assignment
- A building scheme.
Annexation
Annexation is where the benefit of a restrictive covenant is clearly applicable to a defined area of land in such a way that the benefit of the covenant will pass on any transfer of the land. This can be a confusing principle and case law has attempted to clarify it (Federated Homes Ltd v Mill Lodge Properties Ltd[1980]).
Cases in focus: Renals v Cowlishaw (1879) &Rogers v Hosegood [1900]
The above cases show two covenants with very similar wording, but highlight the importance of identifying a dominant land.
Annexation of large pieces of land
When annexing a large piece of land, you wish to place a covenant over, you can either choose to annex the covenant to only the whole of the dominant land, or to annex the covenant to each and every part of the dominant land.
Disadvantages of annexing to the whole of the dominant land
Re Ballard’s Conveyance [1937] Ch 473 highlights the disadvantage very well. In situations where the servient land is small and the dominant land is large in comparison, there may be an issue in proving that every part of the dominant land benefits from the covenant.
Subdivision of dominant land
Where there has been a successful annexation to a dominant land, then the dominant land is subdivided and sold on, the owners of the subdivided land cannot enforce any covenants attached to the original dominant land (Russell v Archdale [1964] Ch 38).
Disadvantages of annexing to each and every part of the dominant land
After we have discussed the disadvantages of annexing as a whole, it would seem that the obvious choice would be to annex to each and every part. However, as you can imagine, the number of dominant owners could end up being extremely large, which may create problems in itself.
Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594 meant that any restrictive covenant entered into after 1925 resulted in an automatic annexation to each and every part of land owned by the covenantee at that point. Crest Nicholson v McAllister [2004] 1 WLR 2409 rejected the Federated Homes reading and held that the dominant land must be mentioned in the conveyance, or identifiable from the surrounding circumstances.
Assignment of the benefit
If some kind of assignment seems to have taken place, the requirements of Miles v Easter [1933] Ch 611 need to be met:
The covenant is for the benefit of some identifiable land
The identifiable land must be benefitted
Earl of Leicester v Wells-next-the-Sea [1972] 3 All Er 77 ruled that the whole of the identifiable land must be benefitted.
The assignee must acquire some of the identifiable land
The assignee need not acquire the whole of the land, but some will be sufficient (Stilwell v Blackman [1967] 3 All ER 514).
The assignment of the restrictive covenant must be simultaneous with the conveyance of the land
However, there are some exceptions to this requirement.
Building schemes
When validly created, all properties are servient and dominant.
The requirements for a building scheme were set out in Elliston v Reacher [1908], and a fifth was added in Reid v Bickerstaff [1909].
Contractual remedies
However, a claim for damages cannot be brought against a successor in title because there is no privity of contract (Rhone v Stephens[1994]).
Avoidance of delay
If an individual is seeking an equitable remedy, there must not be any delay when making a claim. Gafford v Graham(1998) 77 P&CR 73.
The LPA 1925 S84(2) declaration
Reform of the law
Issues with the current law
- The burden of a restrictive covenant does not run at law, but does in equity
- The benefit of a covenant runs at law and equity but under different rules
- The rules are more complicated than the burden rules
- The annexation and building scheme rules are technical and difficult to apply sometimes
The potential solution
These obligations may be positive or negative, and they will be registrable interests. This would make them more akin to easements, meaning they will pass with the property and there would be less complications when ascertaining whether they are enforceable or not.
8.1.3 Freehold and Restrictive Covenants Lecture – Hands on Examples
The answers for this question will be at the very bottom of this page.
The question below should allow you to grasp exactly what a question on covenants may look like.
Here is a basic, sensible approach to questions involving covenants. You may wish to follow this or use your own methods:
- Establish what the covenant is, and whether it is a positive or negative obligation
- Establish who the covenantee is, and who the covenantor is.
- Who gets the benefit of the covenant, and who gets the burden? Identify and dominant and servient land
- Consider the burden of the covenant – can it run at common law? (Remember this is highly unlikely)
- Can the burden of the covenant run at equity as per Tulk v Moxhay – remember the four requirements
- Consider the benefit of the covenant – can it run at common law?
- If it cannot run at common law, can it run at equity? Consider annexation, assignment and building schemes
- What are the remedies and are they enforceable?
This approach should cover all the issues and will allow you to determine whether or not a covenant is enforceable.
Scenario
Anna has inherited a substantial amount of Land from her family in 1970, and has sold a lot of it off with various conditions and promises made between her and the purchasers. She would like some advice on whether anybody can claim against her.
- Anna enjoys her peace and quiet. Lewis then sold the land on to Rob. Unfortunately, Rob has been consistently making noise way past midnight and Anna is unhappy.
Is this covenant enforceable by Anna, and if so, what should she do?
- Anna then sold her piece of land that was adjacent to Rob’s to Sara in 2003. Sara holds the land as fee simple absolute in possession. Sara is not happy.
Does Sara have any remedy against Rob?
- Anna owns a 100 acre piece of land in one corner. In the very far corner she sells 1 acre to Tyler. One condition of the sale is a covenant to not fly any drones or other aerial devices. Subsequently, Anna subdivides her 100 acre piece of Introduction to Land law and sells it off in chunks. The new owner of the land adjacent to Tyler’s is Bob. Tyler has now started flying his drones around and scaring Bob’s dog. Bob wants to know whether he can enforce this covenant.
Does Bob have any remedy against Tyler under equity as per the annexation rules?
- Anna is the original covenantee, and therefore we do not need to consider whether the benefit of the covenant runs. However, as Lewis has sold the land on to Rob, we need to consider whether the burden of that covenant has run. At common law, the burden of a covenant does not run as per the privity of contract rules. However, the burden may run under equity as per the Tulk v Moxhay rules.
- This is a question of whether the benefit of the covenant runs.
As with Anna, she should make the injunction claim as soon as possible.
- The issue here is whether the subdivision of the dominant land will have affected the rights of Bob to enforce the covenant. The case of Russell v Archdale [1964] Ch 38 confirms that annexation to the whole land would not extend to subdivided and sold land. Therefore, Rob would not be able to enforce the covenant.