Freehold covenant

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A freehold covenant is a covenant between freehold owners and arise where one person sells part of his land and wishes to ensure that the buyer does not do anything that could affect the value and amenity of the retained land.

A positive covenant requires the covenantor to do something, e.g. to maintain a wall, while a negative covenant can be satisfied by inaction e.g. not to use the property for business purposes. While covenants can be personal i.e. given for the benefit of the freeholder, in order for successors in title to enforce the covenant, the covenant must be proprietary.

There are two separate sets of rules for the passing of the benefit and burden of freehold covenants at common law and equity.


Protecting against subsequent purchasers

Freehold covenants are often referred to as restrictive covenants and are only capable of being equitable interests in land. They must be registered in order to bind successors in title.

  • In registered land, this requires that a notice be made on the charges register of the freehold estate. If a notice is not entered, a purchase for value of the servient land will not be bound by it.
  • In unregistered land, the covenants should be registered as a class D(ii) land charge at the Central Land Charges Registry. If it is not registered as such, a purchaser for money will not be bound.

The effect of s.56(1]] of the L P A

If A and B, owners of freehold estates, enter into a covenant to perform some service or observe some restriction on the use of their land, then they have an agreement that is enforceable between them. Ordinary common law provisions apply, and if either A or B fails in his or her obligations under the convenant, an action will lie for breach of covenant.

From a land law perspective, a more interesting issue is whether the covenant can be enforced between two parties after either A or B, or both, have sold their estates. To answer that question may require positive responses to three other questions:

Has the benefit of the covenant run with the benefited land? Has the burden of the convenant run with the burdened land? Has the burden of the covenant been correctly noted (e.g., by registration]]? In this article we consider the various situations that may arise in which enforceability of the covenant is at issue. These situations are:

The original covenantor and covenantee retain their interests The original covenantor has sold his interest in his land, while the original covenantee has retained his, and wishes to enforce against the successor to the covenantor The original covenantor has retained his interest in his land, while the covenantee has sold his. The successor to the covenantee wishes to enforce against the original covenantor We will examine the basic rules that apply to each of these situations in outline first, then explain the rules in more detail.

Covenantor and covenantee retain their titles

This situation is straightforward -- the covenantee has a common law right to sue the conventor to enforce the covenant.

Covenantor has sold his interest, while coventantee retains his title

The question here is: has the burden of the covenant run with the land to the new occupier? The benefit does not have to run, because it is the original covenantee that seeks to enforce. The covenant will be enforceable if

E I T H E R

the covenant is restrictive, and the right to enforce is recognized in equity, under the principle in Tulk V Moxhay1848 (see below]], or the covenant is positive and the rule in Halsall V Brizell1956 applies (see below]] A N D the covenantor intended to bind his successors in title to the covenant (but by s.79 of L P A1925 this can be assumed, unless expressly excluded]]

A N D the right to enforce the convenant is properly registered. In the case of Unregistered Land, this means registering a land charge against the owner of the burdened title; for Registered Land it means entering a notice against the burdened title.

Covenantor has retained his title, while coventantee has sold his interest

The question here is: has the benefit of the covenant run with the land to the new occupier of the benefited land? The burden does not have to run, because the original covenantor is still in possession. The covenant will be enforceable if

it is expressly assigned by the original covenantee, or the common law rules governing passing of the benfit apply (see below]], or statutory rules governing the passing of the benefit apply (see below]] Both covenantor and covenantee have sold their interests

In this situation, both the benefit and the burden must run with the land. In addition, the benefit must run in equity, because the person seeking to enforce is relying on equitable rules to enforce the burden. The covenant will be enforceable if:

E I T H E R

the covenant is restrictive, and the right to enforce is recognized in equity, under the principle in Tulk V Moxhay1848 (see below]], or the covenant is positive and the rule in Halsall V Brizell1956 applies (see below]] A N D

it is expressly assigned by the original covenantee, or the covenent is 'annexed' to the land (see below]], or the special rules applying to a Building Scheme Covenant apply A N D the right to enforce the convenant is properly registered. In the case of Unregistered Land, this means registering a land charge against the owner of the burdened title; for Registered Land it means entering a notice against the burdened title.

The rule in Tulk v Moxhay; equitable rules for running of the burden with the land

The rule in Tulk v Moxhay may be of assistance to a claimant who seeks to enforce a restrictive covenant against a successor in title of the original covenantor. The claimant may be the original covenantee, or his successor. If the claimant is not the original covenantee, he has the additional hurdle of showing that the benefit has passed to him, as well as the the burden has passed.

At common law, the burden of a covenant could never be enforceable against anyone other than the original covenator. The benefit of a covenant can be expressly assigned, but not the burden. However, the courts developed exceptions to this rule under equitable principles, in particular in Tulk V Moxhay1848. The general principle now is that the burden of a covenant can now run with the land, provided that

it is negative (restrictive]] in nature, and the covenantee owned land capable of benefiting when the covenant was made, and the covenant 'touches and concerns' the land, and the original parties must have intended to covenant to run with the land, and the owner of the burdened land had notice (or its modern equivalent]] of the convenant when he purchased it These requirements are, essentially, the counterparts of the conditions for the benefit of the covenant running with the land, with the proviso that the purchaser of the burdened land was aware of the covenant.

Tulk applies only to restrictive covenants. The principle that a positive covenant cannot be enforced against a successor in title of the covenantor was explained in Austerberry V Oldham Corporation1885, and later affirmed in the more modern case of Rhone V Stevens1994. A restrictive covenant limits the rights of the landowner that grants the covenant. When the covenantor conveys the land, he cannot grant more than he himself has; since he has limited his rights in certain ways, equity will act to prevent those rights being reinstated by a successor. However, a positive convenant is not a limitation of rights, it is a taking of a burden onto oneself. It is inequitable to allow that obligation to fall on another person. To to so would be in direct conflict with the common law principle that a person can be burdened by a contract to which he is not a party. So, at least, goes the reasoning in Austerberry.

The condition that the covenantor must have intended to bind his successors in title has been affected by s.79 of the L P A. This says that a covenator intends to bind his successors, unless a contrary intention is expressed in the covenant. This appears at first sight to make the intention to bind successors a moot point, but it does not. The courts have inferred an intention to exclude successors in title from the construction of the deed as a whole. For example, in Morrells V Oxford United Football Club2000, the covenantor had undertaken not to construct a pub within half a mile of the covenantee's land. When the covenantor sold part of the land affected by the covenant, the purchaser contended that the covenant was not binding. His contention succeeded, not because the deed expressly excluded the possibility of binding successors, but because other provisions in the deed were expressed to bind successors, and this one was not. The inference, therefore, was that the covenant would have indicated if it was intended to bind successors, as the others had. This is strange, in a way, because the covenants that were expressed to bind successors needed not to have been so expressed, because such an intention would have been implied by s.79. Nonetheless, the fact that a redundant intention was included in some covenants was taken to indicate an absence of that intention in others.

The rule in Halsall v Brizell

In fact, there is an exception to the Austerberry principle that only the burden of negative covenants can run with the land, and not the benefit: the rule in Halsall V Brizell1956. This rule may be of assistance to a claimant who would benefit from the Tulk principle, but for the fact that the covenant is positive, not restrictive.

The rule states that a person must accept the burden of a covenant, if he is to accept the benefit that goes with it, and the benefit and burdern impose mutual obligations. This means, for example, that a covenant to pay money to maintain a road, although positive, might be enforceable if the owner of the burdened land takes the advantage of the covenant (uses the road]]. It does not say that a person must accept any obligations that flow from a conveyance of land if he is to accept any benefits that flow from the same conveyance, although this has been argued (see Rhone V Stephens1994]].

Common law rules for running of the benefit with the land

If the claimant is a successor in title to the original covenantee, and is acting against the original covenantor, then he has to show that the benefit of the covenant has passed to him either at common law or in equity. In particular, he must show that:

the covenant 'touches and concerns the land', and the original covenantee actually owned the land benefited by the covenant, and the covenant was intended to benefit the covenantee's successors in title The effect of s.78(1]] of the L P A1925 is automatically to extend the benefit of a covenant to the covenantee's successor in title, and this extension cannot be excluded by the parties to the covenant. Therefore, whether the benefit runs to successors of the covenantee depends largely on whether the covenant 'touches and concerns' the land.

Note that historically the benefit of a covenant made in favour of a freehold estate would only run to a person who took the freehold estate, and a covenant made by a lessee to a person who was assigned the leasehold interest. More recently, the effect of s.78 of the L P A1925 has been invoked by the courts to allow the owner of a leasehold interest to enforce when the original covenant was made with the freehold owner ( Smith And Snipes Hall Farm V River Douglas Catchment Board1948]] ; the wording of s.78 also probably allows the benefit to be extended to a squatter.

Annexation of the covenent to the land of the convenantee

If the claimant is a successor in title of the original covenantee, and he is acting against a successor of the original covenantor, then the equitable principle of 'annexation' applies. That is, the claimant must show that the covenant is 'annexed' (attached]] to his land. There are three ways in which this can be done.

Express annexation: the covenant is expressed to be annexed. For example, the covenant is made 'with B for the benefit of East Dogpatch Farm'. Implied annexation: the fact that land, and not a person, is to be benefit can be inferred with reasonable certainty from the wording of the covenant. Statutory Annexation: Federated Homes V Mill Lodge1980 held that where s.78 of the L P A1925 applies, then the covenant is automatically annexed to the land. The last point, relating to s.78, is a subtle one. Annexation is an equitable doctrine: it is relevant where the original covenantor and covenantee have both assigned their interests to other parties, because the courts have held that since the burden of a covenant can only run in equity, the benefit must run in equity as well. This means that the benefit must be for the land, not the person named in the covenant. It would be open to the courts to argue that s.78 does not create annexation, and therefore only applies where the claimant is a successor in title trying to enforce against the original covenantee. Federated Homes has rejected this interpretation, although it is a contentious decision. In consequence, the issue of annexation may now be a non-issue, so long as the covenant 'relates to any land' of the original covenantee. This principle has recently been confirmed by the Court Of Appeal in Whitgift Homes V Stocks2001. Note that s.78 defines 'successors in title' to include the 'occupiers for the time being' of the land of the original covenantee. This will include lesees; there is no reason in principle why it should not also include squatters.

Touching and concerning

The principle that a convenant must 'touch and concern' the land is particularly important. Not only is it a criterion for the running of the benefit at common law, and the running of the burden in equity, it is now also a criterion for the running of the benefit in equity. This is because the principle of Federated Homes deems annexation to apply by the effect of s.78, wherever the covenant touches and concerns the land. Of course, there is likely to be disagreement about what 'touches and concerns' means, and the explanation given by Lord Oliver in Swift Investments V Combined English Stores1988 might be helpful: the covenant must affect the nature, quality, mode of user, or value of the land.

Building scheme covenants

Special rules apply to the enforcement of covenents in building schemes. In short, the land must be laid out in plots, and the covenants must be expressed to be between each landowner and the other landowners in the scheme. See Building Scheme Covenant for more details.

Protection of the right to enforce the benefit

The right to enforce a covenant against the owner of the burdened title is, at best, an equitable right. As we have seen, the common law did not recognize the running of the burden to successors in title. The effect of various statutes, in particular the Land Registration Acts and the Land Charges Acts, is to stipulate that rights enforceable in equity can only be enforced against a purchaser of the legal estate if they are properly noted. In the case of Unregistered Land, this means registering a land charge against the owner of the burdened title; in Registered Land it means entering a notice against the burdened title.

One last point -- can a covenant be enforced by a person who is neither the original covenantee, nor a successor in title, nor able to benefit from a Building Scheme Covenant? s.56(1]] states that a conveyance of land will grant to the person taking the estate 'the benefit of any condition ... covenant, or agreement,... even though he may not be named as a party to the conveyance...' s.56(1]] has been interpreted by the courts to mean that any person who can be identified as obtaining the benefit of a covenant should obtain the same rights as the original covenantee. What these rulings seem to imply is that if a covenant is made between A and B for the benefit of B and the occupiers of East Dogpatch Farm, then the occupiers of East Dogpatch Farm may be able to enforce the convenant to the same extent that B can. s.56(1]] does not extend the degree of enforceability of the covenant -- the burden and the benefit must still be shown to run. In short, it does not give extra rights to B, but it gives some of B's rights to strangers to the covenant.

However, Amsprop Trading V Harris1997 -- albeit a first-instance decision -- appears to place a much narrower interpretation on s.56(1]]. In that case, a landlord purported to be able to use s.56(1]] to obtain the benefit of a covenant made between a lessee and a sub-lessee. This convenant was clearly expressed to be for the landlord's benefit, but under the normal rules of landlord-tenant covenants he would not be able to enforce it. To allow the use of s.56(1]] in such circumstances would have been entirely contrary to the intention of landlord-tenant legislation, and it was held that the covenant was not 'with' the landlord, and could not be enforced by him. This decision probably reflects the original spirit of the s.56(1]], which was intended to avoid the strict application of the law of convenants, which required a covenant to be made with a specific, named individual to be enforceable. However, there is now some uncertainty as to the application of s.56(1]], and whether it can be used or not may turn on the exact wording of the covenant.

In short, it now appears that whether s.56(1]] is of any help to a claimant depends crucially on the wording of the covenant.

Land and Property Law