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FREEHOLD COVENANTS - Coggle Diagram
FREEHOLD COVENANTS
TYPES
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Test for positive covenants
The hand in pocket test:
If the covenanter has to put his hands in his pocket to find money to spend to comply with the covenant, it is positive.
In this case money means expense of time, money or effort.
- To successfully enforce a covenant in equity, both burden and benefit must have passed in equity.
- To successfully enforce a covenant at common law, both benefit and burden must have passed at common law.
EQUITY
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Benefit
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The benefit must pass by one of the methods recognised in Renals v Cowlishaw.
- Annexation
- Assignment (Express transfer of the benefit of a covenant alongside a transfer of the dominant land)
- A building scheme
Annexation:
- Express: the wording of the covenant is sufficient to make the benefit part and parcel of the dominant land from the outset.
- Statutory: s.78, LPA 1925 annexes the benefit of the covenant to the dominant land, unless it is expressly excluded.
COMMON
LAW
Burden
The general rule is that a burden
will not pass at common law
This means the original convenantor will
remain liable for any breaches of covenant
committed by the successor covenantor.
To protect himself, the original covenantor can
require the successor covenantor to enter into
an indemnity covenant. This allows the original
covenantor to recover any outlay it has to pay
out for breaches committed by the successor.
An unbroken chain of indemnity operates as an indirect
means of enforcement against the current covenanter.
The chain of indemnity will be broken if a successor is
dead, bankrupt, or missing.
Exception to the general rule
(a.k.a the rule in Halsall v Brizell, or the
doctrine of mutual benefit and burden)
- There must be a clear link between the burden and the benefit;
- There must be a genuine choice as to whether or not to take the benefit (if there is no choice then the general rule applies and the burden does not pass); and
- The benefit and burden must have been conferred in the same transaction.
Benefit
Express Assignment
For the benefit of a covenant to be expressly assigned, s.136, LPA 1925 requires it to be in writing, and for express notice of the assignment to be given to the covenantor (this is to ensure that the covenantor realised that a new person is in a position to enforce the covenant).
Implied Assignment
For the benefit of a covenant to be impliedly assigned;
- it must touch and concern the land,
- there must have been an intention for the benefit to run with the dominant land,
- the original covenantee must have a legal estate in the dominant land,
- the successor covenantee must hold a legal estate in the dominant land (need not be of the same nature. e.g., freehold and leasehold).
DISCHARGE, MODIFICATION,
AND RELEASE OF COVENANTS
Merger:
covenant will automatically be
discharged if the same person
becomes the owner of both servient
and dominant lands.
Express release/ modification via express agreement in a formal release of covenant (must be by deed)
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Statutory discharge/ modification via application to the Upper Tribunal (Lands Chamber) on one of the grounds in s.84, LPA 1925:
- The covenant has become obsolete due to changes in character
- The covenant's continued existence impedes the reasonable use of the land
- The dominant owners expressly or impliedly agree
- The dominant owners will not suffer injury