Freehold Covenants

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  • Created by: Hope
  • Created on: 10-05-16 10:59
What is a case example of someone using covenants to control their land?
C&G Homes Ltd v Secretary of State for Health
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Which type of covenant is the most likely to be enforced?
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What is the test to distinguish between positive and negative covenants? Authority? Judge?
"Is the covenantor required to put their hand in their pocket?" If yes, its positive. Haywood v Brunswick, Cotton LJ
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What are the four situations where covenants occur?
Original parties, covenantor changes, covenantee changes, both parties change
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Which type of covenant does equity enforce? Problems with this?
Negative. This is quite inconvenient for land development
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Do covenants come under interests in land or contractual rights?
Depends on the relationship. Original parties have privity of contract, and they are in a direct contractual relationship they can enforce covenant as contractual right. Any other relationship can't count as a contract.
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What questions do you have to ask before you can enforce a covenant?
Has the burden passed? Has the benefit passed? Both must be established for the cov. to be enforceable
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In what order do you examine the rules?
Common law first, then equity
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What is the rule concerning burdens at common law? Why?
A burden may NOT pass at common law. To ensure that land doesn't become fettered with obligations
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What is the status of that rule now? Is it still applied? Authority?
The rule is still applied, the Lords were reluctant to change it in Rhone v Stephens, but recommend parliament re-examine it. The Law commission have recommended changing it and there is a draft bill that has yet to be implemented
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Are there any ways lawyers have circumvented this problem?
chains of indemnity clauses, rights of re-entry, doctrine of mutual benefit and burden
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What is the most common?
Chains of indemnity clauses
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What is the principle?
Lawyers build upon the idea that the original parties are bound by the contract
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How does it work?
If you covenant with your neighbour, then sold your house, you take an indemnity covenant from that person. If the chain is broken, you have to pay the covenantor
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Is this often successful?
No, chains can easily be broken, if someone in the chain can't be traced or can't pay, or there is an error, it can't work
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What is a right of re-entry? Provision?
Legal interest under s1 LPA. Couple the covenant with the right of re-entry
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Does this work in practice?
No, there are limited times you can use the rights
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What does the law commission say about them?
They are clumsy and draconian
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How does the doctrine of mutual benefit and burden fit with the other rules?
It is completely separate
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What is the basic idea?
That if a covenant gives a purchaser certain benefits, and imposes certain burdens, in some circumstances it would be unfair to let a purchaser or his successors take the benefit if they didn't also take the burden
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What is a normal example of this type of give and take? Case?
Use of road= upkeep. Halsell v Brisell
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What effect did the case of Rhone v Stephens have on the doctrine?
It placed some limits on it, the burden has to be relevant to the enjoyment of the benefit, successor must have had some choice about the transaction - renounce both
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What are some examples of successful applications of this doctrine?
Wilkinson v Kerdene, Elwood v Goodman
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What are the rules in equity concerning positive covenants?
Equity will never help with a positive covenant
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What is the landmark case concerning covenants in equity? Why?
Tulk v Moxhay. It set out the requirements for a covenant to succeed at equity
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What are the four hurdles set out in Tulk v Moxhay?
The covenant must be negative, it should be the common intention of both parties that the burden of the covenant should run with the covenantor, covenant must benefit dominant tenement, covenant has to be registered properly
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What must both the parties intend?
Both parties must intend that the covenant be enforced down the line
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Where can you normally find this intention?
It might be expressed in the wording of the covenant but not, it can be presumed as being under the s79 LPA
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Under what circumstances does s79 apply?
It applies unless a contrary intention can be shown.
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What is a case example of this intention?
Morrells v Oxford United Football Club
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What does the rule that covenants need to benefit the dominant tenement mean?
Covenants need to be attached to certain pieces of land. When the covenant is made, both parties need to have land capable of being the dominant and the servient land, they need to be close enough for it to make sense
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What is a case example of this rule? How is it phrased?
LCC v Allen- the covenant must touch and concern the land
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How are covenants recorded? Provisions?
In registered land, it is registered as a minor interest under s32(1) LRA. In unregistered land, its recorded as a DII under s2 (5) of the LCA 1972
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Do you use equity or common law to pass the benefit?
You can use either, but sometimes you have to use equity
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How can you pass the benefit at common law?
Either expressly or impliedly
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How do you pass the benefit expressly? Provision?
s136 LPA 1925, written assignment with notice to the covenantor.
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When can you do this? Limitations?
Circumstances to do it in this way are very limited, only works when the original covenantor retains their land and when they own the whole of the land.
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What does implied assignment mean?
When you don't rely on express words, instead the circumstances of an individual case.
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What are the requirements for implied assignment and what case do they come from?
Smith v River Douglas Catchment Board, cov. must touch and concern land, covenantee must have legal estate in the land benefited, assignee must have legal estate in the land benefited, benefit must be intended to run with the covenantees land
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What is the test to establish whether the covenant touches and concerns the land? Where does it come from?
PA Swift investments v Combined English Stores; covenant must benefit the covenantee for the time being, covenant must affect nature/quality/mode or user value of the land, cov. must not be expressed to be personal
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When must the covenantee hold legal estate? Any other limitations on this?
At the time the covenant was made. Equitable estate is not ok
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How must the assignee hold legal estate? Provision?
New owner must also have a legal estate as well, s78 LPA says it doesn't need to be the same as the covenantee
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What does it mean that the covenant be intended to run with the covenantee's land? Provision?
Covenant must have been intended to benefit future people, s78 LPA
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When might the benefit pass in equity?
Where both parties have changed, or when you are using equity to pass the burden, then you can also use it to pass the benefit
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How do you pass the benefit in equity?
Assignment, annexation or building scheme
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What is also pre-required?
The covenant must touch and concern the land
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What is assignment?
Agreement between the old owner and new owner that the covenant will be passed on
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What are the conditions for assignment?
The cov. should have been taken to benefit the land, the dominant land should be identifiable, assignment of the cov. should occur at the same time as the transfer of land
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How do you show them?
Normally show the first two with surrounding circumstances, but you need express words to prove the third
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What about when the land changes hands?
This process needs to be repeated
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Which type of transfer is the most important?
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What are the types of annexation?
Express, Implied and Statutory
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What does annexation effectively do to the covenant?
It effectively nails the covenant to the land, not a person
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How do you achieve express annexation?
With words that demonstrate both parties intent that the covenant will be permanently attached to the land
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Which words are sufficient to express annexation? Example?
Words which specifically reference the land. Rogers
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What is the problem with implied annexation? Example?
There are lots of conceptual queries. Professor Sparks thinks this wouldn't survive a a trip to the CA
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How does implied annexation work?
Even when words are missing, the court might infer an intention or the identity of the land from surrounding circumstances
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What are case examples of it working?
Marten v Flight Refuelling, Shropshire CC v Edwards
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What is the most significant method of annexation?
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What statue does it come form?
s78 LPA
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Which case allowed the new interpretation?
Federated Homes
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What does the new interpretation allow for?
Automatic annexation of a covenant to the covenantee's land
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What is a case example of a contrary provision? What effect did this have on statutory annexation?
Roake v Chadha- express provision prevented statutory annexation
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Are there any limitations to when statutory annexation can apply? Example?
J. Sainsbury v Enfield LBC- statutory annexation does not apply to covenants dated before 1926
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What is the other requirement for statutory annexation? Authority?
Crest Nicholson v McAllister - Cov. has to clearly identify the land it is being annexed to, either expressly or impliedly
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How does statutory annexation impact the importance of other methods of passing the benefit of covenants?
It substantially simplifies the law in this area
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In what circumstances are building schemes used?
Clients building large developments, for example
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What are the rules regulating building schemes?
different plots are to be sold off by a common vendor, dev. should be laid out in plots before sale, common vendor must have intended to benefit all the plots, purchasers of plots must have bought on the basis that covs. were to benefit everyone
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What case do these come from?
Elliston v Reacher
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Are these requirements strict? Since when? example?
Since the 1970s, the requirements have been relaxed-Re Dolphin's Coveyance
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How are disputes normally settled?
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Under which statutory provision do you modify/discharge covenants?
S84 LPA 1925
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What is the status of the law in this area?
It is very unsatisfactory, the Law Commission have said reform is overdue, it is outdated and difficult for lawyers, let alone public
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How do you go about applying for modification/discharge? What is the remedy?
You make an application to the lands chamber under s84 LPA. The chamber has discretionary power to modify/discharge negative covs. and possibly award compensation
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What are the grounds for modification/discharge?
Cov. is: obsolete/obstructive to reasonable user. Both parties have consented to get rid of it, breaching the covenant would result in no injury to those with benefit
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What does the law commission suggest?
That freehold covenants carry on as they are, but make a new obligation going forward which facilitates both pos. and neg. covs. Covs. always have to touch/concern land, both benefit and burden will be registerable
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What are the three parts of the proposed new bill?
Creation of new obligation, reform of easements, reform of provisions for modification and discharge
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What does the Law Commission think the main problems are?
Lack of mechanism for pos. covs., difficult to work out who has benefit, confusing rules concerning running of burden and benefit of covs., contractual liability between original parties means that original covenantor remains bound after they sell on
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What is the response to this report?
Overall good
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Which type of covenant is the most likely to be enforced?



Card 3


What is the test to distinguish between positive and negative covenants? Authority? Judge?


Preview of the front of card 3

Card 4


What are the four situations where covenants occur?


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Card 5


Which type of covenant does equity enforce? Problems with this?


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