Restrictive Covenants - Land Law

Restrictive Covenants

Requirements for restrictive covenants

• Need for a dominant tenement

• Need for restrictive covenant to touch and concern dominant tenement

  • Smith: essentially question of fact = has the land been benefited by the restrictive covenant? Courts will be wide in applying this.

  • Wrotham Park Estate v Parkside Homes [1974]:

    • Brightman J:

      • The burden of a covenants is enforceable if:

        • The covenant was entered into for the benefit of the land of the covenantee

        • The land restricted is sufficiently defined or ascertained.

        • The restriction is such that an estate owner may reasonably take the view that the restriction remains of value to his estate.

        • London CC v Allen [1914]:

          • Sedley LJ: you need land that can be benefitted by the burden if you wish to enforce the burden

            • If you’ve disposed of any land near to covenantee’s land

              • Then you cannot enforce the covenant.

  • But three issues remain:

    • Large Estates

      • Can a very large estate be said to benefit from a covenant taken on the sale of a small part?

        • Probably so long as reasonable

      • Smith: today, more likely that covenant provide benefit for part of the estate rather than estate as a whole unit

        • Ergo, if far away part of estate from covenanted land sold off, purchaser of far away part less likely to be held able to enforce covenant.

    • Types of Covenant

      • Covenant not to build or covenant not to change use of land is fine

        • But what about where covenants designed to prevent competition with covenantee’s business on neighbouring land?

          • Hemmingway Securities Ltd v Dunraven Ltd [1995]:

    • How far apart?

      • If covenantee owns properties some distance apart and attempts to impose restrictive covenant on the sale of one of them

      • Smith: courts probably sympathetic, but long distances may lead to trouble.
        

The effect of Restrictive Covenants

Running on of burdens

• Current Position

  • Tulk v Moxhay [1848]:

    • Lord Cottenham:

      • Nothing could be seen as more inequitable that the purchaser who takes the restricted covenant with the land so gets it for a cheaper price

        • Could then the next day sell the land on for a much greater price and without the covenant.

      • Fact that X knew that the covenant existed also makes a difference

        • In equity, the person who purchases property can’t stand in a different situation from the party from whom he purchased.

  • Haywood v Brunswick Permanent Building Society [1881]:

    • Cotton LJ:

      • Mere covenant to improve the land does not run with the land

        • However, if the covenant stipulates that the land is to be used in a certain way only

          • This can be enforced because it is implied by the covenant that the land should not be used in any other manner

        • Even though the covenant itself is in affirmative terms.

• Need Notice

• And post 1925 = registration

• Is this position justified?

  • Rhones v Stephens

    • Collins LJ:

      • A burden and benefit runs not because one or both parties know about the right (they need not),

        • but because the purchaser has bought something which inhered in or was annexed to the land bought

          • The right comes with the land bought b/c it is one of the rights (in addition to ownership) that have come with the land itself.

    • Smith: problem with that reasoning is that it’s difficult to see how the giving of a positive equitable remedy is a negation of common law rules

      • While the giving of a negative remedy is not a negation of common law rules

  • Position of Leases allowing enforcement of run-on positive covenants

    • Smith: maybe more justified for leases b/c covenants work to benefit the leased land

      • Covenants benefiting adjoining land may be seen as less reasonable and less necessary

      • Also fear that positive covenants, w/o statute, would be used in harsh and burdensome manner

Running on of benefits

• Three traditional ways in which a benefit can run-on with the land:

• Annexation

  • This is the linking of the covenant to the benefited land – usually by covenant itself

    • Means that the benefit of the covenant will pass on automatically on transfer of the land

  • Need words that link covenant to the land itself

    • Rogers v Hosegood [1900]:

      • Collins LJ:

        • Where there is a restrictive covenant expressed or implied

          • the first point to be determined is whether the covenant or contract in its inception binds the land.

            • If it does, it is then capable of passing with the land to subsequent assignees (interpret: transferees);

              • if it does not, it is incapable of passing by mere assignment of the land.

    • Smith: land to be benefitted from covenant can be determined from express evidence

      • Reid v Bickerstaff

        • BUT covenants for “vendors, their heirs and assigns” was held to be insufficient words of annexation.

        • Smith: This requirement comes from the contractual understanding of covenants

          • Needs to be an agreement to have covenant linked to land to be sufficient for annexing.

  • The role of the LPA 1925 s.78:

    • Does s.78 operate so as to annex restrictive covenants without the need for express words?

    • Federated Homes v Mill Lodge Properties [1980]:

      • Brightman LJ: s.78 states that covenant made for land shall be deemed to be made with covenantor’s successor in title

        • Which presupposes assignability.

    • Crest Nicholson v McAllister [2004]:

      • Chadwick LJ:

        • Before 1925 needed to show through external evidence that land alleged was intended to be benefitted by the covenant.

        • BUT clear that Federated Homes decided that it is sufficient in the conveyance to describe the land intended to be benefited in terms for it to be sufficiently indentified from other evidence

          • And for that covenant to “touch and concern” that land in question for annexation to successfully take place.

            • BUT the land benefitted must still be easily ascertainable for annexation to succeed.

  • Benefit can be held back if express intention to this aim

    • Crest Nicholson v McAllister [2004]:

      • Chadwick LJ:

        • No reason why, if original covenantor and covenantee make clear their mutual...