Covenant

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A covenant is an agreement between two or more parties made in the form of a Deed. Often a deed to convey an estate in land, or grant a Lease, will contain a number of covenants along with the basic terms setting out the transfer or grant of the estate. These covenants usual bind the parties to do, or refrain from doing, something in respect of the land. For example, a Lease will frequently include covenants for repair that impose liability on the Landlord and the Tenant to keep the property in good order. A Conveyance of a Freehold will typically include convenants not to block shared drains, and to avoid using the property in certain ways. Although covenants are commonly encountered in the context of property law, in most particulars a covenant is nothing more than a Contract. A distinction is that covenants, owing to the greater formality occassioned by the use of a deed, do not require Consideration to be enforceable.

A distinguishing feature of covenants in propery law is that, in some circumstances, they can 'run with the land'. If a builder (let's call him Bob) builds a row of houses, and sells them to Joe, Jim and Jerry, he can extract from Joe etc., a promise not to block the shared drains. But what happens if Joe sells his house to Susan? Susan and Bob are not parties to any contract, so what happens if Susan falls foul of the original covenant not to block the shared drain? Under Privity Of Contract it would be the case that Jim and Jerry could not sue Susan because they are not parties to the covenant. There are contractual ways to make this work, and keep the drains flowing, but it would be a shame if seventy years later Fred buys Jim's house and finds that Susan's family keep allowing the drains to back up, and he can't do anything about it. In short, there are ways to make covenants bind successors in title, even absent a contractual obligation. This means that a covenant in property law is somewhat more than simply a contractual agreement.

In property law, covenants are usually 'negative' or 'restrictive', for reasons explained later. Such covenants oblige the covenantor to refrain from doing something (like blocking a shared drain). 'Positive' covenants oblige the covenantor to carry out some specific action, like painting a house.

Tehnically the benefit of covenant affecting land is a Property right (more technically it is a Servitude), and achose in action. In the case above, Jim, Jerry and Joe have rights over each others' land, and those rights may attach to the land, not to the person. This means that when Susan buys Joe's house she does not have to extract a new agreement from Jim and Jerry. In this a covenant is similar in effect to an Easement, although covenants are a much more modern development.

The distinction between positive and restrictive covenants has important practical consequences. While covenants can be attached to both leasehold (see freehold covenant) and freehold titles, there is no straightforward way to attach a positive covenant to a freehold. This means that it is difficult to develop and sell properties with shared areas as anything other than leasehold (see: Flying freehold), as it is difficult to impose obligations to maintain the shared areas.

An interesting question is whether, at common law, a covenant now is nothing more than a contract made by deed. Of course a covenant is very much like a contract made by deed (a covenant is sometimes called acontract under seal), but are these metas of agreement equivalent? If they are equivalent, then the contracts rights of third parties act (1999) should apply to covenants as well as to contracts, which could have important implications for property law in general. Most authorities take it for granted that a covenant will be treated as identical to a contract by a court, but there are a small number of dissenting voices. Undoubtedly covenants have a very different history from contracts. In any event, there are -- as far as I know -- no court decisions that help much one way or the other. So we shall have to wait and see.

UK LAW
Contract Law