Land Law 2

Freehold covenants; liability of original covenantor

Under s 79 of the Law of Property Act 1925, 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. 

This will be so unless the deed contains a statement to the contrary.

Freehold covenants; benefit of covenant

s78 Benefit of covenants relating to land

(1) 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.

Freehold covenants; does benefit of covenant pass automatically at common law?

For the benefit of a covenant to pass automatically at common law the following requirements have to be met:

1. The covenant must ‘touch and concern’ the land of the covenantee.

 Tucker LJ said that it is necessary for the covenant to ‘touch and concern’ the land of the covenantee. By this he meant that the covenant must either affect the mode of occupation of the land, or must by itself affect the value of the land. It is apparent from this requirement that the covenantee must, at the date of the deed, own land, that is capable of benefiting from the covenant and that the land must be identifiable.

2. Both the original covenantee and the person now seeking to enforce the covenant must have a legal estate in the land.  

It was the position at common law that the person seeking to enforce the covenant had to have the same legal estate as the original covenantee. In  Smith and Snipes Hall Farm, however, one of the claimants was a tenant and therefore did not have the same legal estate as the original covenantee, who was a freehold owner. Nevertheless, the Court of Appeal considered that s 78 of the Law of Property Act 1925 had now altered the position, because under it a covenant relating to land of the covenantee is deemed to be made not only with the covenantee’s successors in title, but also with ‘the persons deriving title under him or them’. A person having an equitable estate is not, of course, able to claim the benefit of a covenant at common law.

3. The original parties must intend that the benefit of the covenant is to run with the land.  

It had to be shown that the parties to the deed intended the covenant to be enforceable not only by the original covenantee, but also by successors in title to the original covenantee. Such intention could be shown by express annexation of the benefit of the covenant to the land of the covenantee in the deed in which the covenant is created, or deemed annexation under statute (s 78 of the Law of Property Act 1925.  However, deemed annexation will apply only to covenants created after 1925.

Freehold covenants; does burden of covenant pass to successor in title at common law?

The burden does not run. A person cannot be made liable upon a contract unless he was party to it.

As the successor to the covenantor was not a party to the contract in which the covenant was created, the common law will not impose the burden of the covenant upon him.

Freehold covenants; does burden of covenant pass to successor in title at common law?

The principle in Halsall v Brizell is that a successor in title who takes the benefit of rights contained in an deed must accept the burden of covenants contained in the same deed.  This is also referred to as the ‘principle of mutual benefit and burden.'

The House of Lords in Rhone v Stephens interpreted the principle of benefit and burden rather narrowly.  Lord Templeman took the view that just because a deed conferred a benefit on a person, it did not mean that all the burdens imposed by that deed became enforceable. 

The burden must in some way relate to the benefit conferred.  This will be so where the covenantor can make a choice between accepting the benefit and burden, or rejecting the benefit and thereby being released from the burden.

Freehold covenants; does the benefit of the covenant run in equity?; s78 LPA 1925

Brightman LJ favoured the view that s78 LPA 1925 operates to annex the benefit of a covenant to a covenantee's land automatically, without the need for express words.

Freehold covenants; does burden of covenant run in equity?

Equity was prepared to enforce a covenant against a successor in title to the original covenantor where that successor had notice of that covenant.

The criteria has been refined as follows:

(a) the covenant must be restrictive in nature;

(b) the covenantee owned land for the benefit of which the covenant was taken, ie the covenant must ‘touch and concern’ the land of the covenantee;

(c) the parties must have intended the burden to run with the covenantor’s land. This may be done expressly in the deed creating the covenant.  The following are examples of such express wording:

• (i) ‘to the intent that the burden of the covenants will run with and bind the property and every part of it’,
• (ii) ‘so as to bind the property hereby transferred’.  

In the absence of express wording, such intention may be implied by s 79 of the Law of Property Act 1925. The effect of s 79 is that, unless a contrary intention is expressed in the deed, it will be implied by statute that the parties intended the burden to pass to successors in title.  However s 79 will only apply to the burden of covenants created after 1925;

(d) the person against whom it is sought to enforce the covenant must have notice of it.

If the title to the covenantor’s land is registered then the restrictive covenant will be an interest affecting a registered estate.  The method of protection is to enter a notice on the Charges Register before registration of the successor as the new proprietor.

Where the title to the land is unregistered, the restrictive covenant will be protected by the entry of a Class D(ii) land charge against the name of the original covenantor on the Land Charges Register before the date of completion of a sale to a successor.

However, if the restrictive covenant was created before 1925, it will be binding on a purchaser, unless that purchaser is equity’s darling.  Pre-1926 restrictive covenants cannot be registered as land charges and they will be enforceable against everyone, except a bona fide purchaser for value of the legal estate without notice.