Freehold Covenants, enforcement and remedies

Introduction

The landowner of a freehold can make promises to another freehold landowner while selling his land or at any other time as they may see fit or as required.

Covenants

Covenants are promises made by landowners in a deed

Covenantee

Covenantee is a person who has actually benefited from or who is actually benefiting  from the promise/ covenant

Covenantor

Is a person who has promised something from his/her land and has the burden of the covenants

Example

PLOT 1 – Albert          PLOT 2 – Ben

Albert is the freeholder (landlord) of Plots 1 and 2.  He sells Plot 2 to Ben

In the transfer deed, Ben promised to Albert that

1. He will not use Plot 2 for business purposes; and

2. He (Ben) will also contribute to maintaining a shared driveway

Promises contained in a deed = covenants

Albert is a covenantee as he has the benefit of the covenants

Ben is a covenantor as he has the burden of the covenants (because Ben cannot use his land for business purposes and also he has to pay for maintenance of the shared drive way

  • In freehold land, it is not uncommon to find covenants or promises in a transfer deed when the property is bought and sold.
  • Often this will be when somebody is selling off part of the land they own but retaining an interest in adjoining land.
  • In this situation if a person selling the land is to remain in effect the next-door neighbour then they have an interest in what happens on the land they are selling and in this situation, it is not uncommon in the transfer deed for the sale to find covenants restricting either what may be built on the land that’s being sold or maybe what use the land can be put to, for example, a restrictive covenant prohibiting business use on the land

Types of Covenants

Covenants may be:

  • Restrictive Covenant, or
  • Positive Covenant

Restrictive Covenants

Under restrictive covenants, the freehold landowner promises not to use the land for a particular purpose for example not to use the property or land for business purposes, not to build on the land or not to build more than a certain number or type of houses on the land.

Important Note

A potential buyer of land will need to know whether there are any covenants relating to the land that could be enforced against him/her if they buy the land.

Positive covenants

Under a positive covenant, the freehold owner promises to do something. These are positive obligations, for example, a promise to construct and maintain a fence between two properties or a covenant to contribute to the maintenance of something like a shared driveway or shared access way.

Enforcement of Freehold Covenants

Covenants are legal promises made in a deed they are binding on the parties like any other contractual obligations between the original parties. Problem arises when one of the freehold landowners sells the property to another person

  • As a principle, the original Covenantee (Albert in our example above) can enforce a promise against Covenantor (Ben in our example above), if covenantor (Ben) does not fulfil his promise/covenant
  • Ben (the original covenantor) has the burden of the covenant/promise and is liable to Albert for any breach of covenant/promise made by him in the deed.
  • When the covenant is entered into between Albert and Ben, this forms a contract and can be enforced under normal contractual principles.
  • Therefore, the original parties to a covenant can enforce the covenant.

Problem with Enforcement

The original covenantee can always enforce the covenant against the original covenantor as a matter of contract. However, problem arises

  • when the original covenantee (Albert) no longer owns the land to which the covenant relates, or
  • where the covenantor (Ben) no longer owns the burdened land

Solution

Under the Law of Property Act 1926, the new owner of the land will be obliged by the promises made by previous the freehold owner

Section 56 Law of Property Act

A person may take the benefit of any condition, covenant or agreement over or respecting any land although he may not be named as a party to the conveyance or another instrument

The new owner of the freehold land will be treated as the original covenantee and covenantor even though they were not a party to the original deed.

Therefore, a covenant may provide/confer enforceable benefits on other people, even though they may not even be aware the covenant has ever been made.

Example

Ali bought plot 2 from Ben, he will be obliged by the covenants made by Ben. Ali will not be able to use his plot for business purposes and may also have to pay for the maintenance of the shared drive way

Rules of enforcement on successors of the property

When the land is sold

  • Different rules apply at common law and in equity
  • Different rules apply for the running of the benefit and the burden
  • Different rules apply for restrictive and positive covenants

However, in a nutshell, these covenants are enforced to their full extent subject to the facts of the individual case. Covenants are complex area of law, for further details or to discuss your individual case Legalally’s expert panellists are happy to provide further assistance

Building Schemes

  • When a new housing estate is developed it is common for the developer to impose covenants in the transfers of all the properties when they are sold, dealing with the management and conduct of the estate.
  • However, usually the developer will not want to enforce these covenants once they have completed the development as they will have moved on and started a new development
  • The people interested in enforcing the covenants will invariably be the residents of the other properties on the estate.
  • Whether or not these other residents can enforce these covenants will depend on a number of factors and it will not automatically follow that all residents will be able to enforce all the covenants in the transfers against the other residents in the estate.
  • So, what is really needed is for the residents to have some form of, local law where they can enforce the covenants directly against each other and this is what is meant by a building scheme

Conditions for Building Scheme

  • All owners of the properties on the estate must derive their title from a common seller, in other words, it must be the same
  • The land must have been laid out in plots before the sale
  • There must be the same restrictions or covenants imposed on each sale
  • it must be made clear in the transfers that these restrictions or covenants are for the benefit of all the plots.
  • The benefit of a building scheme is that all the purchasers of the plots on the estate can enforce the covenants against each other.

Disclaimer

While every effort has been made to ensure the accuracy of the information provided in this article, it does not constitute legal advice and cannot be relied upon as such. Each legal case and issue may have unique facts and circumstances, as a result legalally does not accept any responsibility for liabilities arising as a result of reliance upon the information provided. For further help and guidance, you can always rely on and seek advice from our experienced lawyers.