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Leasehold Covenants, Freehold Covenants - Coggle Diagram
Leasehold Covenants
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Introduction
- Promises made by Landlord (L) and Tenant (T) with each other to do / not to do certain things relating to the land and its environment
- Covenants can be expressed / implied depending on the parties
- Binding between Original Landlord (OL) and Original Tenant (OT) and can be enforced by OL and OT using normal contractual / proprietary remedy
- Obligations can also be passed to successors of rights
Tenant's Obligations
1. Covenants for Subletting / Assignment
- Absolute - Not to sub-let / assign at all - T to adhere
- Qualified - To sublet / assign only with consent of L
S1 and 19 Landlord and Tenant Act (1985):
- Refusal for Assignment and subletting by L must be reasonable
International Drilling Fluids Ltd v Louiseville Investment (Uxbridge) (1986) - Principles in relation to refusal:
- To protect lessor from undesired T or property to be used in an undesirable way**
- Can refuse on grounds other than those related to relationship of L and T
- Onus to proof unreasonable refusal on T
Ash-worth Frazer v Glouchester City Council (2011):
- Refusal to be determined on broad and common sense and not strict approach but must relate to relationship between L and T
Freehold Covenants
The Parties
Original Covenantor
- Person who makes the promise will be bound by the burden of the covenant
Original Covenantee:
- Person to whom the promise is made
- Who will have the benefit of the covenant
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Burdens (Common Law)
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Benefits
Smith & Snipes Farm Hall v River Douglas Catchment Board (1949) - Benefit of a covenant can pass at common law if 3 conditions are satisfied:
Case Facts
- Covenant must touch and concern the land of C
- per P & A Swift Investments v Combined English Stores (1989): Covenant must not be merely personal in nature and must either affect the land as to mode occupation directly affect the value of the land etc
- Rogers v Hosegood (1900)
- The Land that benefits from the covenant must be identified in the relevant conveyance
- The land must be identifiable and can benefit from the covenant
- The original covenantee must have / had a legal estate in land
- C must have a legal estate in land
Smith & Snipes Farm Hall:
- The original Covenantee sold the land to the 1st C who then leased the land to the 2nd C
- A successor in title in land doesn't need to be the same legal estate as the original covenantee
- That land must be readily identifiable and capable of benefitting from the covenant
Williams v Unit Construction Ltd (1955):
- C must have a legal estate in the land but the parties doesn't need to have the same legal estate
- Parties must have intended that the benefit runs with the land:
- Rogers v Hosehood (1900): No contrary intention should be prevalent in the passing of any benefit to a successor in title
- S78 LPA 1925: In the absence of any contrary intention, the covenant is deemed to be made on behalf of the successors in title
General Rule:
- Covenants don't run with the land whether positive or negative or not because common law relies on privity of contract
- Covenant will only bind the original parties to the covenant
Burdens (Equity)
Tulk v Moxhay (1884):
- The burden of negative covenants can run with land provided certain conditions are satisfied
- per Lord Cottenham LC:
- "...the question is... whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased"
Case Facts:
- C (Tulk) sold land to OP (original covenantor) with covenant to not build an open area of Leicester Square (London) and retain as 'pleasure ground'.
- OP sold to D (Moxhay) who built the land
- C brought action against D to enforce covenant
- Held: C can enforce covenant against D (Burden passes to D)
- Negative Covenant - Covenant must be negative in substance:
Bridges v Harrow LBC (1981):
- covenant to retain trees in hedge-grow
- Negative in substance and not just form (look in-depth)
Hemingway Securities v Dunraven Ltd (1991):
- covenant to restrict alienation of covenantor's land
- the restrictive covenant must control the use of land and must be negative in substance
Hayward v Brunswick Building Society (1881):
- restrictive covenants don't need expenditure of money
- Land must be retained by the covenantee and covenant accommodates the dominant tenement:
- The covenant must confer benefit on the land retained by the covenantee
- Dominant tenement = land that receives the benefits
- Serviant tenement = bear the burden
London County Council v Allen (1914):
- the covenant must accommodate the dominant tenement and at the date the tenement was made, the covenantee must've owned the dominant tenement
- must be for the benefit of the land and not the covenantee personally
- Covenant must touch and concern the dominant land
- P & A Swift Investment v Combined English Stores (1989) Test (Apply)
- benefits not just the owner but everyone
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- Both parties must intend the covenant to run with the land. The intention of parties that the covenant would run with the land - usually inferred from the wording of the covenant itself
S79 LPA 1925:
- If there's no intention to the contrary expressed in the conveyance, a covenant is deemed to run with the land
- The presumption is that the covenant was made "by the covenantor on behalf of himself, his successors in title and persons deriving title under him or them
- [If you didn't say anything, the Act will assume that your successor will undertake the obligations unless you specifically say that you only want it to bind you and not your successors]
Morrells v Oxford Ltd v Oxford United FC Ltd (2001):
- When they mentioned they have an express clause on the covenant, they didn't mention the successor who will run in title (ONLY YOU) = S79 won't apply
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EXAM QUESTION:
- CRITICISE THIS CASE BC ITS OLD, SO MANY REQUIREMENTS
Benefits
1. Express Assignment:
- An assignment usually by express words put into a document of transfer executed by the covenantee in favour of his successors in title
- Re Union of London & Smith Bank Ltd Conveyance lays down the requirements:
- Covenant is taken to be for the benefit and protection of the land
- Assignment must happen in tandem with the transfer of the dominant tenement - Newton Abbot Coop
- Dominant tenement must be ascertainable / otherwise shown with reasonable certainty - Miles v Easter (1933)
2. Annexation:
- When the benefit of covenant is "nailed" to a clearly defined area of land belonging to a covenantee in a way that the benefit will pass with any subsequent transfer of the covenantee's interest in the land
- 3 types of forms:
- Express Annexation:
"... his successors and assigns the others claiming under him or them to all or any of his land adjoining... the said premises"
- Its crucial that the benefitted land be referred to
- Implied Annexation:
- Implied by the circumstances
- Statutory Annexation
- Implied by statute per S78
- Whoever who buys the land, benefits will come with the land no matter what
- Principle of Building Schemes:
- Will arise when an area of land into plots and sells those plots to different purchasers
- Developer will need each purchaser to enter into several covenants to maintain quality of estate. If a scheme occurs, purchaser / his assignees can sue and be sued for mutual obligation
- Equity takes view that covenants can be enforced by all owners of land within the scheme
- Elliston v Reacher (1908) laid down the requirements for this scheme to work
- P and D derived title from a vendor
- Before selling, vendor laid down the land in defined plots
- He laid down restrictions on all the plots with some general schemes of development
- Each purchaser bought the plot subject to restrictions and knowing that the covenants are meant for the benefit of other plots
Introduction
- Covenant is a promise in a deed where 1 party undertakes towards another party that he will or will not carry out a specific activity on the land
- Generally dealing with covenants made between freeholders
- Freehold covenants can exist in 2 forms:
- Positive covenants (spend money) - they are less likely to be passed to the successor of the title
- Negative covenants (restrict)