#24 - Freehold And Leasehold Covenants - Land Law

Land 6- Leasehold and Freehold Covenants What is a covenant? * Restrictive Covenantss = promises made under deed between the covenantor (A) and the covenantee (B) in which A promises to use (positive) or not use (negative) his land in a particular way. It operates as a contract so that the original parties can be sued if in breach. The question is how the burden/benefit of the covenant can be transmitted to the assignees of the original covenantee/covenantor. * Privity of estate: this exists between the person who holds the reversion of the freehold and the leaseholder. Between these people the covenants may operate. However the reversion holder in the head lease and a sub-lessee are not in privity of estate * A leasehold covenant is an agreement operating between landlords and tenants. They are now mostly dealt with under the Landlord and Tenant Act 1995 (see below) Leasehold covenants Landlord and Tenant (Covenants) Act 1995 ss 2, 3, 5-8, 16, 23, 25, 28: S.2 This act concerns landlord/tenancy covenants. S.3 (1) The benefit and burden of all landlord and tenant covenants of a tenancy--- (a) shall be annexed and incident to the whole, and to each and every part, of the premises demised by the tenancy and of the reversion in them, and (b) shall in accordance with this section pass on an assignment of the whole or any part of those premises or of the reversion in them. (2) Where the assignor is the tenant, an assignee remains bound by the covenant except where the assignor was not bound immediately before assignment and will get the benefit of any assignment of covenant against the landlord. S.5 If the tenant assigns the whole of premises demised to him he is released from covenants that burden/benefit him. If the tenant assigns only part of the premises, the same applies but only to the extent that those covenants fall to be complied with in relation to that part of the demised premises. S.6 If a landlord assigns the whole reversion of let premises (i.e. assigns the freehold subject to the lease) he may apply to be released from covenants under s.8 and if successful is released from covenants. If he assigns only a part of the reversion, the same applies but to the extent that they fall to be complied with in relation to that part of those premises S.7 Where a landlord assigns the reversion and immediately before the reversion a former landlord is still bound by covenants, the former landlord may apply to be released completely under s.8 if he does not remain the landlord of any other premises demised by the tenancy. The same is true if the landlord is still the landlord of other premises demised by the tenancy, but only to the extent that it falls to be complied with in relation to any premises comprised in the assignment. S.8 Where there is an assignment and the landlord under s.6/7 applies to be released from covenants, he must give notice of the assignment to the tenant and request his release from the covenants. The release is granted if within 4 weeks the tenant does not object OR the court decides that it is reasonable for the landlord to be released OR the tenant consent expressly in writing. S.16 Guarantee agreements for the performance of a covenant are enforceable. An "authorised guarantee agreement" exists if the tenant guarantees the performance of the relevant covenant to any extent by the assignee. Alternatively it may be established if it occurs in the following circumstances: the assignment cannot be effected without the consent of the landlord under the tenancy or some other person AND any such consent is given subject to a condition (lawfully imposed) that the tenant is to enter into an agreement guaranteeing the performance of the covenant by the assignee AND the agreement is entered into by the tenant in pursuance of that condition. An agreement is not an authorised guarantee agreement to the extent that it purports to impose on the tenant any requirement to guarantee in any way the performance of the relevant covenant by any person other than the assignee OR to impose on the tenant any liability, restriction or other requirement (of whatever nature) in relation to any time after the assignee is released from that covenant. S.23 A person isn't liable for things that happen before rights are assigned to them S.25 Any agreement frustrating, contradicting or modifying this act is void. S.28 "assignment" includes equitable assignment. "covenant" includes term, condition and obligation, and references to a covenant (or any description of covenant) of a tenancy include a covenant (or a covenant of that description) contained in a collateral agreement Freehold covenants: running of burden RUNNING THE BURDEN IN EQUITY Tulk v Moxhay (1848) 2 Ph 774: T sold a vacant plot of land in Leicester Square to E. E covenanted that he, his assignees and his heirs would "keep and maintain" the land in an