Freehold Covenants

What are freehold covenants?

Enforcement original parties
Enforcement successors in title
Positive covenants
Discharge/modification

What are Freehold

Covenants?
A covenant is a promise in a deed.
Covenants may be:
Restrictive
positive

A potential buyer of land will need to know

whether there are any covenants relating to
the land that could be enforced against
him/her if they buy the land.

Enforcement Original
Parties
A sells part of his land to B
In the transfer B promises not to carry on any
trade or business on the land.
A (the original covenantee) has the benefit of
the covenant and can enforce the covenant
against B
B (the original covenantor) has the burden of
the covenant and is liable to A for any breach
of covenant.

Enforcement Original
Parties
The original covenatee can always enforce
the covenant against the original covenantor
as a matter of contract.
What is the position if the covenantee no
longer owns the land to which the covenant
relates?
What is the position if the covenantor no
longer owns the burdened land?

Enforcement Original
Parties
Note that the class of original covenantees
can be extended to person who were not
parties to the original deed.
S.56 Law of Property Act 1925
Re Ecclesiastical Comms for Englands
Conveyance [1936] Ch 430
White v Bijou Mansions Ltd [1937] Ch 610
Amsprop Trading Ltd v Harris Distribution Ltd
[1997] 1 WLR 1025
Contracts (Rights of Third Parties) Act 1999

S.56 LPA 1925

PLOT 1
(Mr Green)

PLOT 2
(Mr White)

PLOT 3
(Mr Pink)

PLOT 4

Contracts (Rights of Third

Parties) Act 1999
S.1(1): A third party may enforce a term of a
contract if:
The contract expressly provides that s/he may, or
The term purports to confer a benefit on him/her.

S.1(3): The third party may be expressly

identified in the contract but need not be in
existence when the contract is entered into

Enforcement Successors
in Title
If A sells his retained land to X, can X then
enforce the covenant not to carry on any
trade or business on the land against B?
Does the benefit of the covenant pass to X?

If B sells the burdened land to Y, does Y have

to comply with the covenant?
Does the burden of the covenant pass to Y?

Enforcement Successors
in Title
Different rules apply at common law
and in equity
Different rules apply for the running of
the benefit and the burden
Different rules apply for restrictive and
positive covenants
Adopt a clear structure!

Common Law:
1. The Benefit
The benefit of both restrictive and positive
covenants runs at common law if:
The covenant touches and concerns the land of
the original covenantee
P&A Swift Investments v Combined English Stores
Group [1989] AC 632

At the time the covenant was made it was

intended to benefit the covenantees land
S.78(1) Law of Property Act 1925

Common Law:
1. The Benefit
At the time the covenant was made the
covenantee held a legal estate in the
benefited land.
The claimant must derive their title from or
under the original covenantee but does not
need to hold the same legal estate as the
original covenantee.
Smith & Snipes Hall Farm Ltd v River Douglas
Catchment Board [1949] 2 K.B. 500

Common Law:
2. The Burden
The burden of a covenant does not run
at common law.
Austerberry v Oldham Corporation (1885)
29 ChD 750
Rhone v Stephens [1994] 2 AC 310

Common Law:
2. The Burden
The effect of this is that a covenant can be
enforced at common law only where a
remedy is sought against the original
covenantor.
The claimant must consider the rules in
equity where:
He seeks to enforce the covenant against a
successor in title to the original covenantor, or
He requires an equitable remedy (i.e. an
injunction)

Equity:
1. The Burden
Tulk v Moxhay (1848) 2 Ph 774
The burden runs in equity provided:
The covenant is negative in substance
Haywood v Brunswick Permanent Building Society
(1881)8 QBD 403

At the date of the covenant the covenantee must

have owned benefited land
London County Council v Allen [1914] 3 KB 642
The covenant touches and concerns the land of the
covenantee

Equity:
1. The Burden
The burden is intended to run:
S.79 Law of Property Act 1925

The rules for registration or notice are

satisfied:
Doctrine of notice (if created pre 1.1.1926)
D(ii) Land Charge (if created on/after
1.1.1926)
Notice on the Register

Equity:
2. The Benefit
If the burden of the covenant has run in
equity, the benefit must also run in
equity to enable the claimant to obtain a
remedy.
The benefit may run by:
1. Express annexation
Rogers v Hosegood [1900] 2 Ch 388
Renals v Cowlishaw (1878) 9ChD 125
Re Ballards Conveyance [1937] Ch 473

Express Annexation
The buyer with the intent and so as to
bind the Property into whosoever hands
the same may come and to benefit and
protect the land retained by the Seller
(hereinafter called the Retained Land)
or any part thereof hereby covenants
with the Seller to observe and perform
the following stipulations and
restrictions in relation to the Property

Equity:
2. The Benefit
2. Statutory annexation
S.78(1) Law of Property Act 1925:
A covenant relating to any land of the
covenantee shall be deemed to be made
with the covenantee and his successors in
title and the persons deriving title under
him or them, and shall have effect as if
such successors and other persons were
expressed.

Statutory Annexation
Federated Homes Ltd v Mill Lodge Properties
Ltd [1980] 1 WLR 594
Held: Provided the condition precedent of
s.78 is satisifed, i.e. provided there is a
covenant which touches and concerns the
covenantees land, the benefit of the
covenant is annexed to and runs with every
part of the land.
Roake v Chaddha [1984] 1 WLR 40

Equity:
2. The Benefit
3. Express Assignment
Unbroken chain of assignments
Assignment to purchaser must be made at
time of conveyance/transfer to them

Equity:
2. The Benefit
4. Building Scheme
Derive title from a common seller
Land must be laid out in plots before sale
Same restrictions imposed on each sale &
clear that for benefit of all plots
Purchasers acquire plot on understanding
that covenants intended to benefit all other
plots in scheme
Elliston v Reacher [1908] 2 Ch 374

Equity:
2. The Benefit
How strict are the requirements?
Re Dolphins Conveynace [1970] Ch 654
Baxter v Four Oak Properties Ltd [1965] Ch 816
Emile Elias v Pine Groves Ltd [1993] 1 WLR 305

Positive Covenants
The burden of covenants (positive or
negative) does not run in law.
The burden of a positive covenant does
not run in equity.
There are a number of indirect methods
of ensuring that a positive covenant can
be enforced against the owner of the
burdened land

Positive Covenants
Mutual benefit & burden:
Halsall v Brizell [1957] Ch 169
Rhone v Stephenson [1994] 2 AC 310

A chain of indemnity covenants

Discharge & Modification

Burdened & benefited land in same ownership
Discharge/modification s.84 LPA 1925:
Obsolete due to changes in the character of
property/neighbourhood
Impedes a reasonable user and provides no
practical benefit/value to any person or is against
public policy
Agree/implied discharge
Discharge cause no loss to the person entitled to
the benefit