Summary
Summary Freehold Covenants
- Module
- Land Law - MA in Law / GDL
- Institution
- Land Law - MA In Law / GDL
Summary of 6 pages for the course Land Law - MA in Law / GDL at Land Law - MA in Law / GDL (Freehold Covenants)
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7 Freehold CovenantsFreehold covenants are promises expressly made between neighbouring freeholders – often created when a seller sells part of his land but retains
the rest of it
Creation of Covenants
Formalities
Covenant is a promise contained in a deed, eg promise by one of the parties not to build on land
A contract (thought consideration isn’t essential)
Covenants aren’t capable of being legal (not in s1(2) LPA 1925), so only equitable (s1(3) LPA). Minimum formality is signed writing (s53(1)(a)).
Covenants usually imposed when a person sells part of the land that he owns and are therefore contained in the transfer, eg requiring new
neighbour to erect a fence
Covenants and Easements
Must distinguish a covenant from an easement. Essential differences;
(a) An easement is capable of being legal (s1(2)(a) LPA). Expressly create a legal easement you must have a deed, and for land with
registered title, must apply for an entry to be made on the register. Failure to meet requirements means easement can be only equitable.
Thus an easement can be either legal or equitable. Covenants can only be equitable (s1(3))
(b) Courts are reluctant to recognise all rights over land as capable of being easements, eg can’t have as an easement a right to a view – this
is too wide a right and would prevent development taking place possibly over a wide area of surrounding land
A covenant could prevent neighbour building on land – it would protect your view, but is more limited since it only
affects the land you have sold. Covenants are therefore more flexible than easements
(c) Wording used in documents to create easements are different.
For an easement, land is sold ‘together with the benefit of’ a right of way
A covenant is imposing as; ‘A covenants with B…’
Positive and Restrictive Covenants
Covenants may be either positive or restrictive (negative). What matters is the substance and not its form
→ A positive obligation will often require the person entering into it to spend money.
Terminology
Covenantor = a person who makes the promise is referred to as the covenantor and the land in respect of which it is made is said to have the
burden of the covenant
Covenantee = the person to whom the promise is made is known as the covenantee and that person’s land is said to have the benefit of the
covenant
Annexation = that the benefit of a covenant is attached to the land of the covenantee so that it passes automatically to successors of the
covenantee
Assignment = express transfer of the benefit of a covenant to a successor
Enforcement of the Freehold Covenants
A combination of common law, equity and statute
When dealing with enforcement of a covenant, ask yourself two questions:
(a) Who has the benefit of the covenant?
(b) Who has the burden of the covenant?
Only if a party has the benefit of the covenant can he enforce it; and only if he has the burden of the covenant can action be taken against him
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 Parties to the Covenant
The original covenantee
Only the parties to a contract may sue or be sued on it – a ‘privity of contract’
The original covenantee is a party to the contract in which the covenant was created. The benefit of all the express covenants, positive and
restrictive, real and personal, in the contract. Possible for the original covenantee to enforce any express covenant against anyone who has the
burden of the covenant, including successors in title BUT 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
The original covenantor
Covenants are very often imposed when a person sells part of his land and usually the buyer who is the covenantor and the seller who is the
covenantee
The original covenantor and the original covenantee are parties to a contract – so if one breaches the covenant, the other can obtain either
injunction or damages
S79 LPA 1925; Burden of covenants relating to land;
‘A covenant relating to any land’…shall affect successors in title unless a contrary intention is expressed
Under s79 the covenants relating to the land of the covenantor shall be deemed to have been made by the covenantor on behalf of his successors
in title and persons deriving title under him, as well as on behalf of himself – unless the deed contains a statement to the contrary
The original covenantor will remain liable for breach of covenants relating to land after selling it – combined effect of privity of contract and s79 –
since he has promised not only to observe the covenants, but that his successors will do so as well
S79 doesn’t apply to personal covenants – covenant must relate to the land
For s79 – doesn’t matter if covenant is a positive one or a restrictive one. So original covenantor can be held liable for breaches by successor
covenantor – if estate is freehold, this liability has the potential to last forever
Note: if covenant was personal, and in the original deed transferring land and that personal covenant was breached, the original covenantor can
still be liable, but in contract law rather than by s79
A solution:
When original covenantor sells, they should be aware that the sale wont relieve him from liability under the covenants AND that selling the land
means he can no longer perform the covenants himself
He should require second covenantor to enter into a covenant with him to perform the covenants and to indemnify himself against any future
breach
If he is sued for a breach after the property is sold, he can seek to be reimbursed by covenantor2 – this potential claim is incentive for covenantor2
to comply with the covenants
Covenantor2 can then obtain and indemnity from covenantor3, etc. A chain of covenants is built up
A chain of indemnity covenants isn’t always entirely satisfactory;
1. Only possible to rely 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 so results in a break in the chain
2. Despite the existence of an indemnity covenant from covenantor 2, covenantor 1 may still be liable to pay damages – eg if covenantor2
has gone into liquidation (so no entity to sue), or may be impossible to trace them or they are bankrupt or have died some years ago and
the estate has already been distributed
3. Present owner may not have sufficient money to pay any damages that are awarded
The longer the chain, the more likely it is that there will be such shortcomings. Usual practice of lawyers acting for a seller to require a purchaser of
land to enter into an indemnity covenant whenever the seller is a person who has entered into a covenant or given an indemnity covenant – a
safety net, albeit a net that may develop rips
Position of successor in title; two different rules, one applied at common law and one applied in equity;
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