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Week 9B: Freehold covenants and Intro to Mortgages - Coggle Diagram
Week 9B: Freehold covenants and Intro to Mortgages
What are they?
Often described as restrictive covenants; or more generally, covenants which impact or affect freehold land or alternatively freehold covenants
All basically the same thing but restrictive covenants are negative obligations/covenants which restrict the use of freehold land in some way
They are the most common type of covenant dispute
New sub-divs will have positive covenants
This area overlaps with planning and contract law
A positive or negative promised which impacts the use of freehold land
Covenantee - the person who the promise is given to; that is, the dominant or beneficial lot owner
Covenantor - person who makes the promise; servient or burdened lot owner
Successors in title? Contract does not apply to them unless the interest is assigned or the
Trident v McNiece
principle applies, which recognise third party interests
Essential Characteristics
Covenants of this nature are not considered proprietary unless certain conditions are met. It must pass the test that it
touches and concerns the land
(run with the land)
They are NOT registerable under Torrens in Qld.
Other states and territories record them on title so as to give notice to successive owners but it is not equivalent to obtaining the status of indefeasible title
So it is EQUITY which enforces these interests
Creation
By Deed, but this is not necessary in Qld. So it is sufficient that it be in writing.
In the past it was often included in the contract of sale document
Can be created when plan of sub-div is registered. S 49 PLA
Enforcability
Covenants which affect freehold land cannot be registered. In Qld they cannot even be recorded on title.
So they are NOT legal interests
Equity has devised principles to enforce these promises where there are successors in title involved
Common law has long recognised that the BENEFIT of these covenants can be passed to successive owners
However, the BURDEN is NOT recognised beyond the immediate agreement
Enforceability of BENEFIT Protected
Common law has recognised principles to enforce the benefit of a covenant against successor in title (3rd parties)
This is call
annexation principle
Annexation of benefit to the land
Covenant touches and benefits the land
Requisite intention exists that the covenant runs with the land: s 53 PLA
-s 53 PLA implies the intention once it is established that the covenant touches and concerns the land
The covenantee (original party) held a legal estate to the land at the time the agreement was created
The benefit of the covenant then becomes annexed to the land and can be passed on
Rogers v Hosegood
[1900] 2 Ch 388 at 407
Original covenantee can also
assign
the benefit to another party. It depends on the interpretation of the original agreement. s 199 PLA
SS 13, 55 PLA. These sections recognise 3rd party rights
In equity
What if one of the previous requirements relevant to the application of the common law is not present the does the benefit of the covenant not pass?
NO! Equity will intervene
Annexation principle under equity
The covenant must touch and concern the land of the coveantee (benefit land) -
same considerations as common law
There must be an intention to annex the covenant to the land, where covenants created after 1/12/75 s 53(1) applies.
Same considerations as common law
Land which benefits must be able to be identified (ascertained) by the terms of the covenant.
This is an issue of certainty in the description of the covenant
Recognition of 3rd parties
S 13 PLA
Applies to protect the interests of beneficiaries to enforce a benefit where they are not named as a party in the original document
It must be clear from the terms of the original agreement that the intention was to grant an interest to them.
The third party does not need to formally accept the benefit.
The case of
Bahr v Nicholay
is an example, where the Bahrs were not party to the contract which the land to Nicholay, but their interest, which was a benefit, was expressly mentioned.
Another example, A has an agreement to sell her property to B. The conract of sale contains a clause "that B agrees with A & C to use the property for residential purposes only". RPLIQ [17.100] See
Ecclesiastical Commissioner for England's Conveyance
[1936] 1 Ch 430
Over lap with s 55
S 55 PLA
similar in operation to s 13...Both sections modify the law with respect to privity of contract. However, main difference between 13 and 55 is that 55 requires acceptance of the benefit by the third party by words or conduct, communicated to the promisor.
Further, s 13 of the PLA relates to a third party to a contract taking an interest in land, or the benefit of any condition, right of entry, covenant or agreement in respect of land.
Section 55 is broader and relates to benefits to third parties to contracts generally
Section 13 makes no reference to the requirement of consideration, where section 55(1) requires consideration to move from the promisee to the promisor.
Commercial & Property Law Resarch Centre, QUT, 2018
Property Law Review Final Report Property Law Act 1974 (Qld)
, [58.1.1] 371
Enforceability of BURDEN of Covenant
The common law
does not enforce burdens
against third parties
There been some devices developed to overcome this difficulty
For example, creating a "chain of covenants". It obliges each successive owner to include in the contract of sale of land a covenant that they will comply with the negative covenant
Equity will enforce a restrictive covenant applying to successors in title in certain circumstances
Tulk v Moxhay
(1858) 2 Ph 774; 41 ER 1143
(a) Covenant must be negative
(b) Covenant must be made for the purpose of protecting the land of the covenantee (benefit)
(c) Burden must have intended to run with covenantor's land (burden)
(d) equitable renedies apply
RPLIQ [17.230] p 911
Modification/Extinguishment
By Agreement
Equity
Unification of ownership
Change in the character of the neighbourhood
By court order - s 181 of PLA
Remedies
Injunction
Damages
PLA
and
TLA
Torrens
Exceptions to indefeasibility may apply
In personam
exception in s 185(1)(a) is the most obvious
An opening for equitable principles to be applied
But other than this private covenants are not registered or recorded under Torrens in Qld.
Statutory Covenants
In favour of State and Local Government. They are state imposed covenants which can be registered.
use covenant
Conservation covenant 97A - 97DA LTA
Tying covenant (tying lots together within non-freehold land)
Covenants in building management statements: s 54 LTA
Community title schemes can also include binding covenants relating to architecture and landscaping