Structure on how to answer a question on freehold covenants- whether their benefit or burden runs in equity or at common law. Also remedies for breaches.
It is also possible for persons to enter into a covenant even though the relationship between them is
not that of landlord and tenant. These are freehold covenants, promises expressly made between
neighbouring freeholders. In practice, they are often created when a seller sells part of their land but
retains the rest of it.
Covenants are usually imposed when a person sells part of the land that they own and are therefore
contained in the transfer. Although a sale of part is the situation where you are most likely to
encounter covenants, there is nothing to prevent a person approaching a neighbour and asking the
neighbour to enter into a covenant in return for a payment of money. Here you will just have a deed
containing the promise and there will be no transfer of ownership of land.
Covenants can only be equitable (Law of Property Act 1925, s 1(3)).
Structure
- -Identify Covenantor and covenantee.
- -Identify the covenants- if they are positive or negative and have any been breached
- -identify which land is benefitted/which is burdened
- Look at equity first
- Start with the burden in equity, can the burden be passed? E.g., has E got the burden
through equity. Look at Tulk and Moxhay conditions
- Consider if benefit of promise will pass? E.g., has it passed to Victor. Consider assignment
and annexation.
- Then look to remedies
- Look at common law for anything not enforceable in equity
- Start with burden at common law
- Then the benefit at common law
Question Structure
1. It is often useful to draw a simple diagram to identify the various events and the benefited and
burdened land, to help you structure your answer.
2. You will need to analyse the types of covenant that exist and identify them as positive or
restrictive. You may also need to consider whether the covenant is one that is likely to touch and
concern the land or is personal only. Identify any breaches of these covenants to ensure you deal
with each one in full.
Covenants are promises which may be either positive or restrictive (or negative). It is important to be
able to distinguish them. What matters is the substance of the covenant and not its form. You can
usually identify a positive covenant by asking yourself whether the person giving it will have to ‘put
their hand in their pocket’. It may appear to be positive covenants but in substance may be
restrictive.
3. Identify which parties the claimant can sue (usually you are advising an aggrieved owner of the
benefited land, but this is not always the case).
ORIGINAL PARTIES
Only if a party has the benefit of the covenant can they enforce it; and only if they have the burden
of the covenant can action be taken against them. So it is always necessary to ascertain whether the
, present owner of the benefited land has any right to enforce the covenant and whether the present
owner of the burdened land has any liability for the covenant.
The original covenantee is a party to the contract in which the covenant was created. As such, the
original covenantee will get the benefit of all the express covenants, positive and restrictive, real and
personal, in the contract. It is therefore possible for the original covenantee to enforce any express
covenant against anyone who has the burden of the covenant, including successors in title. However,
the original covenantee cannot sue successors in title if the covenantee has parted with all the land
for the benefit of which the covenant was taken.
Under s 79 of the Law of Property Act 1925, the covenants relating to the land of the covenantor
shall be deemed to have been made by the covenantor on behalf of their successors in title and
persons deriving title under them, as well as on behalf of themselves. This will be so unless the deed
contains a statement to the contrary.
As original covenantor, they will remain liable for breach of covenants relating to the land even after
selling. As the estate is a freehold one, the liability has the potential to last forever.
Section 79 of the Law of Property Act 1925 does not apply to personal covenants. It is necessary for
the covenant to relate to the land. For the purposes of s 79 of the Law of Property Act 1925, it does
not matter whether the covenant is a positive one or a restrictive one.
BUT- If there had been a personal covenant given in the original deed transferring the land, and that
personal covenant had been breached at a later date by a successors in title, the original covenanter
would be liable on such a covenant but not by virtue of s 79. They would remain liable in contract
law, despite the breach not being their own.
Protection
When the covenantor sold to X he should have required X to enter into a covenant with him to
perform the covenants and to indemnify him against any future breach. In this way, if he is sued for a
breach committed after he has sold the property and has to pay damages, he can seek to be
reimbursed by X.
BUT- It is only possible to rely fully on a chain of indemnity covenants if the original covenantor and
each person giving an indemnity covenant obtains an indemnity covenant from the person to whom
they sell. Failure to do this results in a break in the chain. E.g. death, person missing, insolvent etc. So
a party that had an indemnity may still end up out of pocket.
SUCCESORS IN TITLE TO THE ORIGINAL PROPERTY
The running of the benefit at common law (LOOK AT EQUITY FIRST BELOW)
The benefit of both positive and restrictive covenants will pass to successors of the covenantee at
common law in one of two ways:
a) by express assignment; or
Such an assignment was recognised by equity and may also now be effective as a legal assignment
under s 136 of the Law of Property Act 1925. The assignment must occur at the same time as the
transfer of the land. It must be in writing signed by the assignor (eg the original covenantee), and
written notice of the assignment must be given to the person with the burden of the covenant.
b) automatically if certain conditions are met.
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