Freehold Covenants
Firstly, what are covenants?
Covenants are promises between freeholders.
These promises relate to a duty one freeholder must undertake or something which they must refrain from doing.
This therefore provides a means of control over land which is not their own.
For example:
Refrain from building on land, or only use the land for residential purposes.
Maintain your property or financial contribution towards maintenance of a co-used road.
How are covenants created?
Covenants must be created using a deed!
They operate within a contractual dimension in how they bind original parties to the contract, however the existence of
the deed means that you do not need to demonstrate consideration.
However, they can also be proprietary in nature – and therefore they can have a lasting effect and therefore bind future
purchases. This goes against fundamental rules of privity of contract and therefore they require some strict rules to be
applied.
The real question arises over when and how they can bind individuals other than the original parties. You will see, there
is a big distinction between rules at law and equity (as always!).
Before we get there however, let’s look at why freehold covenants came to existence and what role do these promises
play
Freehold Covenants: Historical developments
As society evolved from primarily agricultural, there arose a shift from rural areas into urban locations becoming more
sought-after.
Where the value in such land grew, the management became crucial and middle classes wanted to make sure that the
areas are kept up and stay attractive.
Communal gardens required joint maintenance and protection – hence covenants, such as up-keep costs, preventing
these areas from being built etc.
Law did not allow sufficient flexibility – Equity steps in… it created a new source of proprietary interests (and therefore
being able to bind third parties), through a form of covenants.
Freehold Covenants: The role they play
Freehold covenants play a much larger role nowadays - majority of freehold land is subject to some form of covenants.
These allow a lot more flexibility than restrictions placed via planning permissions for example.
Freehold covenants essentially form contracts which are enforceable between neighbours – but may also create
proprietary rights which will be enforced by their successors.
Freehold Covenants: Types of Covenants
There are two types of covenants: positive and negative.
This distinction is crucial because the law approaches these differently.
, Freehold Covenants: Terminology
Let’s address the terminology in this area, before we get muddled up and confused.
The covenantor
= the promisor
- The person who makes the promise…
and..
- The covenantee
= the promisee
- The person to whom the promise was made…
Scenario
Jasmin enters into a covenant with Terry which promises that her land will never be used for commercial purposes.
Jasmin also promises to pay half the maintenance costs of a garden, which she and Terry share.
Negative Covenant:
Jasmin will not use her land in a certain way (commercial).
Positive Covenant:
Jasmin will pay half the costs for upkeeping the shared garden.
Can Terry keep Jasmine to the promise? Can this be enforced?
Is there a difference between positive and negative covenants?
Jasmin and Terry are the ORIGINAL PARTIES.
It is significant that they were the ones that reached an agreement between themselves, to place obligations and
restrictions in relations to the land.
Therefore, the covenantor has the burden and the coventee has the benefit.
Both positive and negative covenants can be enforced without any problem.
Breach and enforceability
The covenantee - can take action against the covenantor, and could be awarded:
damages or:
an injunction (to preemptively stop the covenantor from breaching a negative (‘restrictive’) covenant in the future).
specific performance of the contract (to compel the covenantor to carry out a positive covenant).
Passing the BURDEN: LAW
At law, it is impossible to pass the burden, whether in relation to positive or negative covenants.
Austerberry v Corporation of Oldham
F: A covenant to maintain and repair a road made by original parties, then sold to subsequent parties (Austerberry and
Corporation of Oldham)
Q: Enforceable?
D: NO! Lindley LJ:
‘I am not aware of any other case which either shew, or appears to shew, that a burden such as this can be annexed to
land by mere contract… the burden of the covenant does not run with the land’
The law does not allow for the burden to pass. However, there are some exceptions to this and there are indirect ways
of passing the burden.
Firstly, what are covenants?
Covenants are promises between freeholders.
These promises relate to a duty one freeholder must undertake or something which they must refrain from doing.
This therefore provides a means of control over land which is not their own.
For example:
Refrain from building on land, or only use the land for residential purposes.
Maintain your property or financial contribution towards maintenance of a co-used road.
How are covenants created?
Covenants must be created using a deed!
They operate within a contractual dimension in how they bind original parties to the contract, however the existence of
the deed means that you do not need to demonstrate consideration.
However, they can also be proprietary in nature – and therefore they can have a lasting effect and therefore bind future
purchases. This goes against fundamental rules of privity of contract and therefore they require some strict rules to be
applied.
The real question arises over when and how they can bind individuals other than the original parties. You will see, there
is a big distinction between rules at law and equity (as always!).
Before we get there however, let’s look at why freehold covenants came to existence and what role do these promises
play
Freehold Covenants: Historical developments
As society evolved from primarily agricultural, there arose a shift from rural areas into urban locations becoming more
sought-after.
Where the value in such land grew, the management became crucial and middle classes wanted to make sure that the
areas are kept up and stay attractive.
Communal gardens required joint maintenance and protection – hence covenants, such as up-keep costs, preventing
these areas from being built etc.
Law did not allow sufficient flexibility – Equity steps in… it created a new source of proprietary interests (and therefore
being able to bind third parties), through a form of covenants.
Freehold Covenants: The role they play
Freehold covenants play a much larger role nowadays - majority of freehold land is subject to some form of covenants.
These allow a lot more flexibility than restrictions placed via planning permissions for example.
Freehold covenants essentially form contracts which are enforceable between neighbours – but may also create
proprietary rights which will be enforced by their successors.
Freehold Covenants: Types of Covenants
There are two types of covenants: positive and negative.
This distinction is crucial because the law approaches these differently.
, Freehold Covenants: Terminology
Let’s address the terminology in this area, before we get muddled up and confused.
The covenantor
= the promisor
- The person who makes the promise…
and..
- The covenantee
= the promisee
- The person to whom the promise was made…
Scenario
Jasmin enters into a covenant with Terry which promises that her land will never be used for commercial purposes.
Jasmin also promises to pay half the maintenance costs of a garden, which she and Terry share.
Negative Covenant:
Jasmin will not use her land in a certain way (commercial).
Positive Covenant:
Jasmin will pay half the costs for upkeeping the shared garden.
Can Terry keep Jasmine to the promise? Can this be enforced?
Is there a difference between positive and negative covenants?
Jasmin and Terry are the ORIGINAL PARTIES.
It is significant that they were the ones that reached an agreement between themselves, to place obligations and
restrictions in relations to the land.
Therefore, the covenantor has the burden and the coventee has the benefit.
Both positive and negative covenants can be enforced without any problem.
Breach and enforceability
The covenantee - can take action against the covenantor, and could be awarded:
damages or:
an injunction (to preemptively stop the covenantor from breaching a negative (‘restrictive’) covenant in the future).
specific performance of the contract (to compel the covenantor to carry out a positive covenant).
Passing the BURDEN: LAW
At law, it is impossible to pass the burden, whether in relation to positive or negative covenants.
Austerberry v Corporation of Oldham
F: A covenant to maintain and repair a road made by original parties, then sold to subsequent parties (Austerberry and
Corporation of Oldham)
Q: Enforceable?
D: NO! Lindley LJ:
‘I am not aware of any other case which either shew, or appears to shew, that a burden such as this can be annexed to
land by mere contract… the burden of the covenant does not run with the land’
The law does not allow for the burden to pass. However, there are some exceptions to this and there are indirect ways
of passing the burden.
