1. Freehold Covenants What are freehold covenants?
Enforcement – original parties
Enforcement – successors in title
Positive covenants
Discharge/modification

2. 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.

3. 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.

4. 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?

5. 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 England’s 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

6. S.56 LPA 1925 PLOT 1 (Mr Green) PLOT 2 (Mr White) PLOT 3 (Mr Pink)

7. 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

8. 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?

9. 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!

10. 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 covenantee’s land
S.78(1) Law of Property Act 1925

11. 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

12. 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

13. 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)

14. 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

15. 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 )
D(ii) Land Charge (if created on/after )
Notice on the Register

16. 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 Ballard’s Conveyance [1937] Ch 473

17. 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…

18. 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.

19. 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 concern’s the covenantee’s land, the benefit of the covenant is annexed to and runs with every part of the land.
Roake v Chaddha [1984] 1 WLR 40

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

21. 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

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

23. 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

24. Positive Covenants Mutual benefit & burden:
Halsall v Brizell [1957] Ch 169
Rhone v Stephenson [1994] 2 AC 310
A chain of indemnity covenants

25. 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