Restrictive Covenants

A covenant is an undertaking contained in a deed in which one party promises another that he will or will not engage in a specified action in relation to his land. Covenants bind the parties to act within the terms.

It first has to be established as to whether the benefit has passed at common law. In order to do this, there are 4 requirements which need to be considered under Smith & Snipes Hall Farm v River Catchment Board (1947):

- The covenant must touch and concern the land 

-The benefit of the covenant must be intended to run with the land

- The covenantee must have a legal estate in the land to be benefited

-The successor must also have a legal estate in the land to be benefited

The rule from Rhone v Stephens is that the burden cannot be passed at common law. However, the case of Austerberry v Oldham established that there are ways to circumvent this:

-By A Chain of Indemnity Covenant, going back to when the covenant was created. If a transfer occurs where there is no indemnity covenant, then the chain is said to be broken and the future transfers do not require it. 

-By accepting the benefit, the burden will also have to be accepted

Tulk v Moxhay:

There are four conditions which need to be satisfied:

-The covenant must be negative in nature, meaning that it must prohibit some act on the land

- The convenant must have owned the benefitted land

-The burden of the covenant must be intended to run with the land (i.e. touch and concern the land)

- Lastly, the covenantee must be protected by the appropriate form of registration

Where the burden has passed, the successor must prove the benefit of the covenant runs in equity. The burden may pass through

-Annexation, where the covenant is attached to an identifiable piece of land. Once annexed, the benefit effectively becomes part of the land. 

Express Annexation

The wording of the covenant shows that the benefit is being attached to the actual dominant land

Implied Annexation:

If there are no sufficient words of express annexation, surrounding circumstances and imply annexation are observed.

Stututory Annexation

In Federated Homes v Mill Lodge Properties Ltd (1980)

-The Court of Appeal found that s78 of the LPA 1925 operates to automatically attach the benefit of a covenant to a dominant land without the need for express words.

However, s78 provides no provision for contrary intention. Arguably, it makes annexation a compulsory consequence

Express Assignment:

The covenantee expressly transfers the benefit to successors. He assigns his benefit

Schemes of Development:

This arises in situations where you have a large estate, owned by a single owner who decides to sell the estate in lots. However, there are two key requirements that must be met for such a scheme to operate. 

-There must be an identifiable scheme, it must be possible to identify the perimeters of the land.

-There must be a mutually perceived common intention; that a scheme was intended to be established.

The court can declare the validity or otherwise of the covenant.

s84 (1) of the LPA 1925

Any person with an interest in the freehold that is affected by a restriction may apply to the Land Tribunal for an order to discharge or modify the restriction.

This order may be granted where:

-the restriction has become absolete

- restriction does not provide any practical benefit to any person or it is contrary to public interest

- the proposed discharge will not injure persons entitled to the benefit