What is a restrictive covenant?
A enters into an agreement with B that they will not do something without their consent. If A promises not to build on their land, A has the burden of the covenant, B has the benefit
What is the problem that will typically arise concerning covenants?
- Where land is conveyed to another, issue is showing that the benefit and the burden held by A and B will pass to new owners
- If A’s land was sold, B would have to prove that the burden from A passes
- If B’s land was sold, the new purchaser would have to show the benefit passes with B’s land
- If the covenant is mutual however, it is hard to say what title passes to new owners
What is the difference between being the successor in title and a person deriving title?
SUCCESSOR: acquiring full freehold title
DERIVING: Lease or mortgage from original owner
How does the burden of a covenant run? (i.e. who can be sued?)
Burden does not run at law, Rhone v Stephens, therefore we must turn to equitable principles
What does the case of Tulk v Moxhay tell us about the passing of a burden?
A purchaser who has notice is subject to the burden. Three main principles derive from this:
1. Parties must intend for the burden to run with the land, if silent this will be presumed by s79 LPA 1925
2. It gives a benefit / relates to the dominant land, only the person with title to this land can enforce it (London CC v Allen)
3. Covenant must be negative in nature
What is meant by the covenant being related to land?
- Must not be some personal obligation
- s79 Law of Property Act 1925, covenant should affect them as owners of land (word saving device for the covenant)
What does the case of Rhone v Stephens tell us?
- Burden can never pass where the covenant is positive
- Enforcement of a positive covenant lies in contract since it compels an owner to exercise his rights
When is it possible for the burden of a positive covenant to run?
Halsall v Brizell
If there is a mutual benefit and burden
Thamesmead Town v Allotey
Building on Rhone v Stephens, sets out the requirements in order for it to pass:
1. The benefit and the burden must be linked with one another, benefit comes because of performance of the burden
2. Party should have a choice as to whether to accept the benefit and burden
3. Must be conferred in the same transaction
Wilkinson v Kerdene: If the fee can be apportioned then it should be, however if this is not possible so long as it relates to a benefit the owner is entitled to the whole fee can be enforced against him
What does the case of Re Nisbet & Potts Contract tell us?
- A restrictive covenant, as an equitable proprietary interest, is binding on all except a bona fide purchaser for value without notice
- Because the person has a new right in the land (e.g. lease) they have taken the land with that burden
What are the rules on registration of restrictive covenants?
- Must be entered as a notice under s34 LRA 2002
- If this is not registered, anybody who purchases the land for valuable consideration will not be bound by it due to the defence under s29
- Where a positive covenant is enforceable by the mutual benefit and burden principle the covenant does not have to be registered
This is for the burden, PQs will often gift the land, in such a case s29 cannot be used
How can the benefit of a covenant pass? (i.e. who can sue?)
- Assignment, both in law and equity
- Annexation of the benefit of the covenant, either by express words, implication or s78 LPA 1925
- Under a scheme of development
What is assignment of the benefit in law?
S136 Law of Property Act 1925
Benefit of the covenant may be assigned to the next person who buys the land (this would have to be done in all subsequent conveyances). It must:
* Be in writing
* Written notice must be given to the original covenantor
What are the requirements for assignment of the benefit in equity?
Miles v Easter
1. The land must be capable of being benefitted by the covenant
2. This land must be ascertainable or certain from the deed of conveyance, and
3. The benefit of the covenant can no longer be enforced where the covenantee has parted with some or all of his land
What is annexation and what must be done for this to be satisfied?
Process by which the benefit of the covenant is glued to the land so it passes automatically
1. There must be intention that the benefit should become part of the land, used to have to rely on written words but can now use S78 LPA 1925
2. It must touch and concern the land
NOTE: this applies for both common law and equity, the only difference is in common law they must own a legal estate in the land
How was the effect of s78 expanded in case law?
Federated Homes v Mill Lodge
- s78 LPA 1925 has the effect of annexing the benefit of a covenant to each and every part of the land it benefits, it is more than a word saving provision
- If the condition precedent of s78 – that the covenant touches and concerns the covenantee’s land – is met, the benefit runs with the land
Smith & Snipes Hall Farm
A successor in title need not hold the same legal interest in the estate for the benefit to pass
- In a scenario where land is sold to B from A and then leased to C, B could claim the benefit because it was assigned to him as well as C who it had been annexed to. Both could claim damages
- To touch and concern the land is must either affect the lands mode of occupation or the value of the land, not the user
How can s78 LPA 1925 be stopped?
Crest Nicholson v McAllister
A contrary intention can exclude certain purchasers such that s78 will not apply. Land must be ascertainable from something in the conveyance, but can be aided by by external evidence
What case shows express annexation (i.e. one done by words) in equity?
Rogers v Hosegood
What is a building scheme and what effect does this have on covenants?
- Multiple different parties making different promises to one another
- There is a common vendor that sets out a scheme with plots sold to different people
- Equity will support the enforcement of common covenants between all owners
What are the four necessary requirements for a scheme of development and where do these come from?
Elliston v Reacher, confirmed in Re Dolphins Conveyance
1. Owners derive title under a common vendor
2. Vendor laid out a defined portion of land subject to restrictions intended to be imposed on all lots
3. Mutual restrictions were intended by the vendor to be for the mutual benefit of all plots
4. Purchaser must have bought the plots with the knowledge that the restrictions were for the benefit of other lots in the scheme
NOTE: This is about enforcing the benefit of covenants
In what ways may the benefit of the covenant pass by contract?
S56 Law of Property Act 1925
* Provides that a person may take an immmediate interest in the land or any covenant respecting it although he may not be named as a party to the conveynace
* Covenant must be made ‘with him’, so come within a general category named in the covenant (such as current owners) but must be existing and identifiable at the time, i.e. not a future owner
* Beswick v Beswick: The person must be still a party to the agreement, it just that he is not expressly named
Contract Rights of Third Parties Act 1999
Under s(1) a person can enforce a term of a contract if it expressly provides they can or exists to give them a benefit, and this applies either if they are expressly named or as an identifiable class (e.g. successors in title)
