Proprietary rights in land - Rules for passing the benefit and burden of freehold covenants

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Overview

Freehold covenants play a crucial role in property law, defining rights and duties related to land ownership. For SQE1 FLK2 candidates, understanding how these covenants work and how they transfer to new owners is vital. This article dives into the legal aspects of freehold covenants, detailing key principles, case law, and modern legal updates affecting property transactions today.

The Nature and Classification of Freehold Covenants

Defining Freehold Covenants

These covenants are agreements regarding land use, often between a landowner (covenantee) and another party (covenantor). They create promises that may apply to future landowners.

Types of Covenants

  1. Restrictive Covenants

    • Limit specific land uses
    • Generally enforceable against future owners under equity

  2. Positive Covenants

    • Require certain actions to be performed
    • Typically do not bind successors at common law, with some exceptions

  3. Negative Covenants

    • A form of restrictive covenants
    • Typically enforceable against successors more easily than positive covenants

The 'Touch and Concern' Doctrine

To run with the land, a covenant must:

  • Influence the land's nature, quality, or value
  • Connect adequately with the land itself
  • Not be intended as a personal covenant

Legal Framework for Passing Benefits and Burdens

Common Law Principles

  1. Benefits

    • Run with the land if they 'touch and concern' it
    • Must be explicitly assigned or annexed to the land

  2. Burdens

    • Usually do not transfer at common law
    • Exception: Leasehold covenants between landlords and tenants

Equitable Principles

  1. Benefits

    • Transfer to successors if intended to run with the land
    • Must 'touch and concern' the land
    • Successor must be aware of the covenant

  2. Burdens

    • Restrictive covenants bind successors in equity
    • Must meet conditions from Tulk v Moxhay (1848)

Statutory Interventions

  • Section 78 LPA 1925: Treats covenants as benefiting the land unless stated otherwise
  • Section 79 LPA 1925: Enables enforcement of covenants against successors

Key Case Law and Principles

Tulk v Moxhay (1848)

Established that restrictive covenants can bind successors if:

  • The covenant is negative
  • It is intended to run with the land
  • The successor knows of the covenant

Austerberry v Corporation of Oldham (1885)

Reinforced that positive covenants do not transfer, leading to alternative enforcement methods.

Rhone v Stephens (1994)

Confirmed the difference between positive and restrictive covenants, highlighting the need for legislative change.

Mechanisms for Enforcing Positive Covenants

Due to enforcement challenges, various methods have developed:

  1. Chain of Indemnity Covenants

    • Owners agree to comply and ensure successors do the same
    • Can fail if a party does not obtain the covenant

  2. Estate Rentcharges

    • A charge on the land with positive covenants
    • Enforced by threat of re-entry

  3. Commonhold

    • Under the Commonhold and Leasehold Reform Act 2002
    • Allows positive obligations to bind successive unit holders

The Role of Land Registration

The Land Registration Act 2002 affects covenant enforcement by requiring:

  • Registration of restrictive covenants as notices
  • Non-registration may result in the covenant being overridden

Impact of Doctrines and Modern Developments

Proprietary Estoppel

This doctrine can affect covenant enforcement if:

  • Assurances lead to reliance
  • It potentially overrides covenant transmission rules

Technological Advancements

Modern practices enhance covenant management:

  • Electronic conveyancing increases registration efficiency
  • Digital registers improve transparency

Examples and Applications

Scenario 1: Restrictive Covenant on Building Height

A restrictive covenant limits building height on a property. It is registered, and a developer cannot construct a taller building, as the covenant binds successors and is on record.

Scenario 2: Positive Covenant for Shared Path Maintenance

A property owner agrees to maintain a shared path. The new owner is unaware and neglects it, causing disputes. The positive covenant may not pass automatically unless formal arrangements exist.

Conclusion

Understanding freehold covenants involves both common law and equity principles. Critical points for the SQE1 FLK2 exam include:

  1. Distinguishing restrictive from positive covenants and their enforceability
  2. The 'touch and concern' doctrine's role in covenant transfer
  3. Key cases like Tulk v Moxhay and Austerberry v Corporation of Oldham
  4. Methods for enforcing positive covenants and their challenges
  5. The importance of land registration in enforcement
  6. The impact of legal and technological developments on covenant management

Understanding these ideas is key to handling complex property dealings and excelling in the SQE1 FLK2 exam.