Freehold Covenants

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1. Defining and Exploring Freehold Covenants

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A burden on the land. Right in favour of someone who has no estate in the land.

Particularly in older times, like when the water supply wasn't nationalised.

Positive covenants like cutting down trees, must take positive action to maintain the burden. Courts more cautious with these, you must exert finance/effort.

They are contracts, but what if the property is sold? How can successors in title benefit from or have burden of a freehold convenant? Depended on classification as positive/negative.

Generally:

Burden doesn't pass on (different owner)

Benefit does. (same owner, different person benefitting)

Unless the burden is negative.

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1(b): Shelly v Kraemer

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2 black families purchased properties. Freehold covenants in each case said that certain races couldn't occupy property in that neighbourhood, most people in the neighbourhood had signed it. Ferguson's case was similar, restricted from selling the property to any black person.

Lower courts said it hadn't been signed by enough residents. Missouri SC upheld it.

Ferguson's. State circuit court wouldn't interfere w/private agreements.

US SC, they relied on the 14th amendment. They overturned the decisions, private individuals can engage in any racist agreements they choose, but they cannot rely on state machinery to enforce them.

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2. Positive Covenants and the Running of the Benefit/Burden Prior to the LCLRA 2009

A) The Running of the Benefit at Common Law

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Needs 4 conditions in order for a benefit to run with the land.

1. The Covenant must 'touch and concern' the land of the covenantee.

Tucker LJ in Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board. Affect as regards mode of occupation, or affect the value, and it was the intention of the parties that it should run with the land.

2. Original party and persons now enforcing the covenant must have (had) legal proprietary interest in the land that benefits

3. Enforcing party must have same estate in law as original party had

4. Covenant must be intended to benefit successors in title

Shayler v Woolf. Woolf in freehold to pump water into E's property, who sold the land to Shayler. Judge said core issue was how the court constructs the initial contract. Value of the property would be seriously diminished if the property didn't have access to water. Looking at the contract too, it was clear that they intended new successors in title to benefit.

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2(B): The Running of the Burden at Common Law

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Ordinary rule is the burden of a positive covenant does not run with the land, not fair to impose a burden on a successor in title. Goes against contract law.

Rhone v Stephens and Murphy J in Cardiff Meats Ltd v McGrath: Enforcement of positive is contract, enforcement of negative is property.

But the person who sold the land continued to be contracted to enforce the covenant.

Exceptions:

1. Indemnity Covenants

2. Principle of benefit and burden. If you enjoy the benefit, you're compelled to take on the burden. Halsall v Brizell.

3. Conveyance of a long lease and which subsequently could be converted to a fee simple estate under the Conveyancing Act 1881.

4. Conveyance of fee simple subject to a condition subsequent.

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3. Restrictive Covenants and the Running of the Benefit/Burden Prior the LCLRA 2009

A) Freehold Covenants & Equity

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Two major contributions.

1. Provided more effective remedies than just damages: Specific performance and injunction.

2. Developed special rules as regards restrictive covenants

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3(B): Does the Benefit 'Run with the land'?

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1. The covenant must touch and concern the land, in that the covenant must have been intended to benefit nearby land and not be a mere personal benefit for the covenantee

2. Party claiming the benefit must be entitled to the benefit of that covenant by means of:

A) Assignment. Covenant transferred with land as a separate but connected right. Had to be simultaneous.

B) Annexation. Attached to land so that it passes automatically with the land onto every subsequent transfer.

C) A local scheme of development. Most usual. Covenants intended to be mutually enforceable. Elliston v Reacher set out the conditions. Restriction against building something can be enforced by successors in title against successors in title. Reid v Bickerstaff, did those who have title in the property have notice of the restrictive covenant? and was the restrictive covenant for the benefit of the land?

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3(C): Does the Burden Bind Successors-in-Title?

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Tulk v Moxhay. Tulk sold vacant land to E. There was a burden which stated it had to be kept open with no buildings. Sold the land to Moxhay. Attempted to build there. Tulk succesfully got an injunction against him. This is because here the burden ran with the land because the party(moxhay) intended to use the land in a manner inconsistent with the contract entered into. Contract had no express mention of the burden, court still enforced it as he had notice. Prior to entering into it, he knew he would not be allowed to do so.

Only a bona fide purchaser of a legal estate for value without notice will not have a restrictive covenant enforced against her.

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4. The Running of Covenants: The Law after the Land and Conveyancing Law Reform Act 2009

A) Law Reform Commission 2003 Report on Positive Covenants.

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1. Shift towards freehold rather than leasehold conveyancing makes reform more urgent.

2. Tulk v Moxhay rule of only negative burdens running with the land is unsatisfactory. It can disappear if it passes to equity's darling because it's based in equity.

3. Compared with NI and Trinidad and Tobago law.

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4(B): Scope of Freehold Covenants

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Affects covenants entered into on or after 01 December 2009.

Section 48 of the LCLRA 2009:

Now dealing with covenants as appurtenant rights

A covenant attaching to dominant land and servient land which has been entered into after the commencement of this chapter

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4(C): Enforceability of Freehold Covenants

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Section 49 of the LCLRA 2009:

Current rules abolished.

Any FC, positive or negative, is enforceable by:

1. Dominant owner for the time being or

2. Someone who isn't the owner anymore but it was breached while they were

against:

1. Servient owner for the time being for any breach of covenant by them which occurred before and continued unremedied after they became servient.

or

2. Any person who used to be the owner.

Where there's a scheme of development, reciprocally benefiting and burdening covenants are enforceable. (Elliston v Reacher)

Where land is divided, it's enforceable against the person owning the piece it falls into or it's apportioned between the parts.

Parties can expressly contract out of the scheme.

Basically, both positive and negative covenants affecting freehold land will be equally enforced and will run with the land.

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4(D): Discharge and Modification of Freehold Covenants

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Section 50

Can apply to the court for an order discharging whole or part of a freehold covenant created before or after the Act on the basis that continued compliance with it would constitute an unreasonable interference with the use and enjoyment of the land.