#2008 - Positive Covenants Overview - Land Law

Positive Covenants

The running of a burden

• Smith: has long been clear that burden of positive covenants

  • Do not run with any land to which the covenant is attached

    • Rhones v Stephens [1994]:

      • Lord Templeman:

        • As between landlord and tenant both the burden and the benefit of a covenant pass at law with subsequent transfer

          • For everyone else, the benefit of a positive covenant may run with the land at law but not the burden.

        • Restrictive covenants can impose restrictions in favour of the covenantee and deprive the purchaser of some rights they would normally receive from being purchaser.

          • Thus, when the land then passes to another, that successor is also deprived of those rights which the original purchaser did not get

            • All Equity does is prevent said successor from enforcing the rights he never received.

  • In recent decades, number of attempts to extend the burden running which is recognised in equity re: restrictive covenants

    • To the application of positive covenants.

      • However, this has been firmly rejected:

      • Haywood v Brunswick Permanent Benefit BS [1881]:

        • Brett LJ:

          • An assignee taking land subject to a certain class of covenants is bound by such covenants if

            • he has notice of them,

            • and that the class of covenants only restrict the mode of using the land

              • but can’t enforce burdens against the land which are affirmative unless implication = negative burden effect.

Limited ways to make the burden run

• Commonhold

  • The use of “commonhold”, a form of ownership, can lead to the burden of positive covenants running with the land

    • But commonhold is only suitable for certain types of situations so is not always a way of getting round this restriction.

• Leasehold covenants

  • Leasehold covenants permit both positive and negative covenants to run

    • Any assignee of the Landlord or the tenants will be bound by the covenants

    • For practical purposes, the use of a long lease will be as sufficient as if it were a fee simple (e.g. for a block of flats where covenants running = necessary)

  • However, number of disadvantages

    • Enable Landlord to enforce covenants, but nobody else can do so

      • Lessees of one flat, for instance, won’t be able to enforce covenants against other lessees in different flat.

    • Means that covenants less flexible – even if you have land benefitted by the covenants you may still not be able to enforce them

• Chain of Covenants

  • Where covenant relates to the land

    • Will normally provide that covenantor will be liable if he sells the land and purchaser fails to comply with the covenant

  • So covenantor will require purchaser to comply with covenant to avoid attracting liability to covenantor himself

    • And if purchaser does not comply, the covenantee will sue the covenantor who will in turn sue the purchaser

      • Purchaser, when later selling land, will then require next purchaser to comply

      • Thus, positive covenant burden continues

    • Problem = chain is liable to be broken

      • If Covenantee or intermediate purchaser disappears or dies

        • Then chain fails to impose liability of the current owner, meaning current owner not bound to comply.

    • Problem = convoluted route of liability owing to Privity rules

      • C must sue X who must sue Y....

      • Although Contract (Rights of Third Parties) Act 1999 may help here.

• Require Covenantee’s consent before sale by covenantor

  • This enables the covenantee to require the purchaser to take a fresh and direct obligation

    • As a condition for the covenantee’s consent to the purchase

      • In registered land, sale in breach of the requirements will lead to the sale being prevented by an entry of restriction

  • Process is very slow and cumbersome though

  • And doesn’t work for unregistered land

• Benefit and burden

  • May be possible to bind a purchaser where covenant is the counter part of rights being enjoyed by purchaser

    • Rhones v Stephens [1994]: X separated two houses, covenanted for all successors to keep roof in good repair. Both houses transferred, and roof fell in from rain damage. Y tried to enforce covenant against X’s successor in title.

    • Lord Templeman:

      • Equity can’t force someone to do something which they never promised to do

        • Otherwise this would contradict the rule that X can only be liable on a contract if he was a party to it.

      • Thus positive covenants are only enforceable against the user who agreed to them

        • Not his successor in title.

          • Unless X receives a benefit which comes with a burden relevant to the exercise of that right.

    • Thamesmead Town Ltd v Allotey [1998]: X bought house from L w/ number of res and pos covenants on condition that make successor enter into fresh deed w/ L if X sold house. X sold house but failed to do so. L tried to enforce covenants against D b/c D received some benefits.

      • Peter Gibson LJ:

        • A successor in title must chose whether or not to take the benefit

          • And if he does choose to

            • There should then be some correlation between the benefit and the burden for the burden to be enforced.

The benefit of positive covenants

• Requirements

  • Covenant must touch and concern the benefitted land

    • And perhaps that the covenant intended to run with the land

      • Smith: but developments w/ restrictive covenants imply that it is unnecessary to make express provision in the contract

  • Coventator and coventatee need not have the same estate in land

    • Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949]:

      • Denning LJ: no need for distinction to exist

        • As long as covenant made it can be passed by s.78 to those who then are intended to be benefitted by it and have “interest” only

          • Regardless of their status as freehold or leasehold tenants.

  • Need not specify in conveyance that covenants will move on to successors in title

    • LPA 1925: s.78

  • Party need not be named as a party to the covenants expressly

    • LPA 1925 s.56:

      • "A person may take an immediate or other interest in land or other property,

        • or the benefit of any condition, right of entry, covenant or agreement

          • over or respecting land or other property

            • although he may not be named as a party to the conveyance or other instrument."

    • Two possible interpretations:

      • 1. Denning LJ in Smith and Snipes

        • s.56 means, therefore, that a person may enforce an agreement respecting property made for his benefit,

          • although he was not a party to it.

            • As long as he has a sufficient interest in land that he can be benefitted by it.

            • Overrules Privity doctrine.

        • Smith: s.56: covenant may be intended to benefit neighbouring owner who is not party to the conveyance

          • Problem = laws of Privity of contract

          • BUT Smith: common law allows those who are named as parties in a deed to sue upon deed even though they hadn’t executed it

            • Ergo, does s.56 relax the rule for having to name said people even on the Deed?

      • ...