#2021 - Reform Of Covenants - Land Law

Law Commission CP 108 (2008): Reform of Covenants

Reform History – suggestions for reform over the years

• Number of options have been considered over the years for the reform of covenants:

  • Wilberforce Committee:

    • Problem identified that the burden of positive covenants, as opposed to the benefit =

      • Positive Covenants cannot run with the land

        • Other devices trying to circumvent this restriction = inadequate

    • Proposed to allow positive covenants benefits AND burdens run with the land

      • And that Lands Tribunal have ability to discharge or modify positive covenants

  • Law Com 1967:

    • Two problems identified with restrictive covenants:

      • Enforceability of particular covenants often in doubt

      • Procedure for discharge and modification inadequate

    • Proposals:

      • Creation of “land obligation” created by specified land over other specified land

        • Thus meaning benefit and burden would run automatically with the land

        • More akin to easements than covenants

          • To address this problem, amend s84 of LPA 1925 so that Lands Tribunal have greater powers to modify or discharge obligations.

Case for Reform: 2008

• Restrictive Covenants

  • Law Com: keep restrictive covenants b/c still useful

    • Reform will cure of defects

    • Planning Law is wide but still need private restrictive covenants b/c:

      • Restrictive covenants cater for private individuals for purposes which planning law doesn’t help

      • Planning Law can’t deal with restrictive covenants as unrealistic to expect planning authorities to concern self with detailed matters for which restrictive covenants now make provision

      • Certain changes of use which neighbour might reasonably object to don’t require planning permission

      • Only planning authorities can enforce planning controls – restrictive covenants needed to allow private individuals to enforce instead.

    • Abolition would lead to Land arbitrarily changing value overnight b/c some rights that were enforceable would no longer be enforceable

    • Preventing freehold covenants will lead to people using leasehold instead where still available – for better or worse.

  • Defects of restrictive covenants

    • Identifying who holds the benefit

      • Currently

        • No need to expressly identify benefitted land if external evidence will show which land it is

        • No requirement for Land Registry to enter the benefit of equitable interest into Land Register

          • Only that such land has restrictive covenants on it

    • Running of benefit and burden

      • Burden can run with land but only after fulfilling complex requirements

      • Similarly, benefits can also run but only after fulfilling even more complex requirements.

    • Liability between original parties

      • Contractual liability still exists between covenantee and covenantor even if they’ve disposed of land

        • Therefore go to extra expense of having to put in indemnity clauses to avoid later being sued despite having no land burdened or benefitted anymore.

  • Defects of Positive Covenants

    • Benefit of positive covenant can run at law

      • But the burden will not run to bind successors either at law or in equity

        • Rules to circumvent this are very complex and insufficient.

        • Distinction made by Lord Templeman in correct but unhelpful for Law’s development:

          • Equity cannot compel an owner to comply with positive covenant without contradicting Privity of contract rule.

        • Is permitted in leasehold that benefit and burden will run at law.

The Case for “Land Obligations

• Proposed that restrictive covenants and positive covenants reformed:

  • Become one “Land Obligation” which allows positive and negative burdens to be placed on one land for the benefit of another

  • Enforceable by the owners “for the time being” of the dominant land

    • Thus meaning that once X was no longer owner of the dominant land, they could no longer be sued/sue on it

      • Interest would be attached to the land and therefore only enforceable by those with interest in said land.

  • Parties intending to create this benefit would have to label it expressly a “Land Obligation”

    • Mean that no longer necessary to determine whether benefit/burden meant to travel with the land b/c obvious.

      • Highly technical rules would disappear

  • Restrictive Covenants and Positive Covenants cannot simply be extended:

    • Positive covenants need a completely different legal regime than that which applies to covenants

      • Smaller class of people should be bound by positive covenant that restrictive covenant – b/c positive covenants require action + expense

        • Would be inappropriate to enforce positive covenant to build sea wall against weekly tenant

          • Whereas not doing something should be available against all interests b/c merely have to refrain from doing something.

      • Equitable remedies are appropriate for restrictive covenants

        • Positive covenant remedies need to be wider and at law b/c idea of simply enforcing simple covenant to pay money by equitable remedies = artificial.

    • Law would therefore be simpler for positive covenants than restrictive covenants

    • BUT would be inconsistent to have two different systems.

  • Restrictive covenants and positive covenants need new system

    • Contractual model = not good: creates unnecessary problems and obscures proprietary nature

    • Covenants are still enforceable between existing parties – we don’t like!

    • System like that of Landlord and Tenant (Covenants) Act 1995 adds additional extra layer of unnecessary complexity.

      • So, should just hold that, like easements, a positive obligation should just attach to the land.

Land Obligations: A more focused look on enforceability.

• Requirements

  • Land Obligations would be like easements – you would need a dominant and servient tenement

    • Dominant Land would receive the benefit

    • Servient land would receive the burden

  • Person seeking to enforce Land Obligation would have to show:

    • At the time of enforcement they have benefit of Land Obligation

    • Land Obligation has been breached

• Effect of benefit

  • Benefit would pass automatically on transfer

    • Whether whole land or part of land transferred

    • And whether transfer is a lease or freehold (so...