Freehold Covenants 1 Notes

Land Law: Freehold Covenants 1, Common Law

• Freehold covenants = covenants made between freehold owners—when one person sells part of their land and wants to make sure the buyer does not do anything that could affect the value and amenity of the retained land. Can also arise by agreement between 2 separate plot owners, even where no prior period of unified ownership of the two plots.

• Definitions:

  • Covenant = a promise generally made in a deed (although actual formalities, s53(1)(a) LPA 1925—evidenced in signed writing). It is enforceable without the need for consideration, as a legal fiction is utilised by which the deed is deemed to be the requisite consideration.

  • Positive or Negative/Restrictive.

  • Covenantor = person who makes the promise. They are said to take the burden of the covenant (so are at risk of being sued if the covenant is breach).

  • Covenantee = person who receives the benefit of the promise. This person has a right to sue if breached.

  • Servient land = land owned by the covenantor, which carries the burden of the promise.

  • Dominant land = land which enjoys the benefit of the promise.

• Can be positive or negative/restrictive in nature

  • +ve covenant = requires covenantor to do something in order to keep the promise, eg a promise to maintain a boundary fence.

  • -ve covenant = can be satisfied by mere inaction on the part of the covenantor and typically involves a promise to refrain from doing something, eg a promise not to build.

• Can be purely personal to the covenantee (i.e. entered into simply for that person’s benefit);

• Or can be one that ‘touches and concerns’ the land (i.e. made for the benefit of the covenantee but in his/her capacity as owner of that particular property)—this is not intended to be personal to one person only.

Personal rights CF Interests in land

• Personal rights--Where a covenant is given by one freeholder for the benefit of another freeholder, this creates a personal contractual relationship between them. The performance of the covenant is governed by the law of contract.

• Interests in land: covenants can also be proprietary interests—attached to the land, enforcement extends beyond the original parties and contract law. A buyer of the servient land may take the burden of covenants; and a buyer of dominant land may take the benefit of covenants.

Positive and Negative/Restrictive

• Only restrictive covenants are binding—

• Eg +ve covenant: Annie covenants with Meg to build a single storey dwelling.

• Eg of negative/restrictive covenant:

  • Annie covenants with Med not to building anything other than a single storey dwelling.

• Annie covenants with Meg not to build anything on the land without the consent of the adjoining owner [[this is a restrictive covenant overall, but with a positive condition]

• So a POSITIVE COVENANT CAN NEVER PASS WITH THE LAND, is not an interest in land and does not pass on to a new owner.

Enforceability

Enforceability by the original parties while still in possession

• The ordinary rules of Privity of Contract apply—all covenants are enforceable between the original parties, as a matter of contract law.

Enforceability against successors in title

• If both the covenantee and covenantor passed on their title.

• Say A enters into a covenant with B. A, the original covenantor, sells the servient land to X. B, the original covenantee, sells the dominant land to Y. Would Y be bale to enforce non-performance of the covenant against X?

• Depends on:

  • (1) whether the benefit of the covenant B enjoyed passed to Y upon purchase of the dominant land; and

  • (2) whether the burden of the covenant A agreed to passed to X upon purchase of the servient land.

• We need to look at:

  • Rules for passing benefit at common law

  • Rules for passing burden at common law

  • Rules for passing benefit in equity

  • Rules for passing burden in equity.

• NB different approaches for common law & equity

  • Not that the common law and equity rules cannot be mixed. Cannot show that the benefit has passed at common law and the burden has passed in equity. Both benefit and burden must pass at common law; or both must pass at equity.

Transmission of Covenants at Common Law

The transmissibility of rights in contract law

• Basic rule of contract law = the benefit of most contracts can be assigned (provided the contract is not explicitly or impliedly a purely personal one).

• However, whilst the benefit of most contracts is generally assignable; the same does not hold true for the burden, which normally cannot be assigned. [[because the identity of the person tasked with the burden is normally a critical aspect of why a contract is agreed in the first place]].

• So, at common law: the benefit, but not normally the burden, of a freehold covenant, can pass to a successor in title. This simply reflects the basic position in contract law.

THE BENEFIT (in what circumstances will the original covenantee, B, pass on the benefit to a new purchaser, Y)

Passing benefit at common law—1^st method—express assignment

• Under normal contractual principles, the benefit of a covenant may be expressly assigned by the original covenantee (here B) to their successor (here Y), under ...

• Express assignment, s136 LPA 1925 (= assignment of a chose in action). Follow conditions:

  • 1. Assignment is in signed writing

  • 2. Express notice in writing of the assignment is given to the covenantor.

Passing benefit at common law--2^nd method—Implied passing of the benefit

• If no express assignment; benefit may pass if certain conditions are met. This is the common law equivalent of annexation—the benefit is metaphorically nailed to the dominant land so that it passes with the estate.

• P A Swift Investment v Combined English Stores Group plc [1989] AC 632, 4 conditions, HL

  • 1. The covenant must ‘Touch and concern the land’

  • The benefit cannot be passed on if it confers a mere personal privilege. Eg a covenant not to sell the servient land to anyone with children is for the personal benefit of the covenantee (as it ...

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