18.2 Freehold Covenants

18.2 Freehold Covenants

Quick Answer: Between the original parties a freehold covenant is a contract. After a sale, the benefit can pass at law and in equity, but the burden does not run at law. Only a negative covenant can bind a successor in equity under Tulk v Moxhay, and then only if it was intended to bind the land and the successor has notice (in practice, registration). Positive covenants need a chain of indemnity, a right of re-entry, or the narrow mutual benefit and burden rule.

This independent OpenExamPrep section is FLK2 Land Law on passing the benefit and burden of freehold covenants. Leasehold covenants are a different statutory scheme and are taught in 18.4.

Original parties and the two questions after a sale

While the original covenantor and covenantee still own the two plots, enforcement is straightforward contract law. Damages, injunction and, where appropriate, specific performance are available. The SQE problem almost always moves the land. Then ask two separate questions:

1. Has the benefit reached the person who wants to sue (usually a later owner of the land intended to be protected)?
2. Has the burden reached the person who is to be sued (usually a later owner of the land intended to be restricted)?

Do not run those questions together. A successor of the dominant land may hold the benefit, yet still lose if the defendant is a successor of the servient land and the burden has not passed.

A covenant is negative (restrictive) if it can be complied with by doing nothing: not to build, not to use as a shop, not to cause nuisance. A covenant is positive if it requires expenditure or action: to repair a wall, to contribute to a road, to maintain a roof. The court looks at substance, not drafting. A covenant 'to use the premises only as a dwelling' is negative. A covenant 'to keep the roof in repair' is positive.

Passing at law

Benefit at law. The benefit of a freehold covenant can pass at law if the covenant touches and concerns the dominant land, the original parties intended the benefit to run, and the claimant has the legal estate in that land. Section 78 LPA 1925 deems a covenant relating to land of the covenantee to be made with the covenantee and the covenantee's successors and the owners and occupiers for the time being. Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 WLR 594 reads section 78 as annexing the benefit to each part of the dominant land, unless a contrary intention appears. Roake v Chadha [1984] 1 WLR 40 shows that contrary intention can block annexation (there, the benefit was only to pass by assignment). Crest Nicholson Residential (South) Ltd v McAllister [2004] EWCA Civ 410 requires the dominant land to be sufficiently identified in the instrument or from the surrounding circumstances known to the parties. Annexation to 'land retained by the vendor' can work if that land can be identified; annexation into the air does not.

Burden at law. The burden of a freehold covenant does not run with the land at common law: Austerberry v Oldham Corporation (1885) 29 Ch D 750, confirmed in Rhone v Stephens [1994] 2 AC 310. Section 79 LPA 1925, which deems a covenant to be made by the covenantor on behalf of successors, does not make the burden run. It mainly identifies who is an original covenantor for the purpose of the original contract. A later owner of the servient freehold is not liable at law on the covenant merely because they bought the land.

That is why conveyancers use indemnity chains. Each buyer covenants with their seller to observe the original covenants and to indemnify against breach. The original covenantor remains liable on the contract and sues down the chain. If a link is missing (a death, a disappearance, an insolvency with no indemnity), the chain breaks. Indemnity is a personal workaround, not a proprietary passing of the burden.

Passing in equity: Tulk v Moxhay

Equity allows the burden of a negative covenant to run. Tulk v Moxhay (1848) 2 Ph 774 restrained a purchaser of Leicester Square who knew of a covenant not to build. The modern requirements are:

• the covenant is negative in substance (Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD 403);
• it was intended to bind successors (often helped by section 79 wording, but intention is still a fact);
• it benefits identifiable dominant land of the claimant (London County Council v Allen [1914] 3 KB 642: a covenant in gross will not do for Tulk purposes);
• the defendant is a successor of the original covenantor's land, not a mere occupier who never took the land, unless other doctrines apply;
• the successor took with notice.

Notice is now a registration question, not a Victorian morals question. On registered land, a restrictive covenant is protected by a notice on the charges register. Without a notice, a later registered purchaser for valuable consideration takes free of it under section 29 LRA 2002 (subject to limited exceptions). On unregistered land, a restrictive covenant entered into after 1925 is a Class D(ii) land charge. Unregistered, it is void against a purchaser of a legal estate for money or money's worth, even a purchaser who actually knew of it. Doctrine of notice survives only for a small rump of pre-1926 covenants and a few interests that never entered the land charges scheme.

The benefit in equity passes by annexation, assignment, or a building scheme. Annexation is the everyday route after Federated Homes. Assignment of the benefit must generally accompany the transfer of the dominant land and must be of the benefit of the covenant, not a vague wish. A building scheme (Elliston v Reacher [1908] 2 Ch 374) lets owners on an estate sue each other: a common vendor, a defined estate, mutually similar restrictions intended to benefit all lots, and the buyer taking on the footing of a local law for the estate. Reciprocity is the point. It is how a later householder on Plot 12 sues a later householder on Plot 4 even though neither was an original party.

Positive covenants and Halsall v Brizell

Because Tulk is limited to negative promises, a covenant to repair a private road does not bind a later freeholder merely as successor. Three workarounds appear in problem questions.

Chain of indemnity, described above. Condition or right of re-entry: the original transfer may reserve a right to re-enter if positive obligations are not performed, giving a proprietary stick that is not the same thing as the burden running. Mutual benefit and burden (Halsall v Brizell [1957] Ch 169): a person who claims the benefit of a right (using estate roads or drains) cannot take that benefit without the related burden (paying a fair contribution). Later cases keep this narrow. Rhone v Stephens itself refused to use the principle to force a later owner to repair a roof. Thamesmead Town Ltd v Allotey (1998) 30 HLR 1052 and Davies v Jones [2009] EWCA Civ 1164 require a correlation between the benefit and the burden, and a real opportunity to decline the benefit. You cannot force a successor to accept an unwanted facility in order to pile a positive cost onto them.

Section 56 LPA 1925 and the Contracts (Rights of Third Parties) Act 1999 can let a named or described person who was not a party enforce an original covenant, but they do not, by themselves, make burdens run with the land.

Worked example

In 2010 V sells Plot A, retaining Plot B. The transfer contains a covenant by the buyer 'not to use Plot A for any purpose other than a single private dwelling' and a covenant 'to contribute one half of the cost of maintaining the shared drive'. Both covenants are expressed to be for the benefit of Plot B. A notice of the restrictive covenant is entered on Plot A's registered title. No notice can turn the contribution covenant into a Tulk burden. In 2026 Plot A is sold to P and Plot B to Q.

Q wants to stop P opening a café. The covenant is negative. The benefit was annexed to identifiable Plot B (s.78; Federated Homes; Crest Nicholson). The burden runs in equity under Tulk because P took Plot A with the notice on the register. Q can seek an injunction.

Q also wants P to pay half the drive costs. That covenant is positive. The burden does not run at law or under Tulk. Q should look for an indemnity chain back to the original buyer, a reserved right of re-entry, or Halsall v Brizell if P actually uses the drive and can decline that use. If P has independent access and does not use the drive, Halsall will fail.

Exam traps

Do not let section 79 do the work of Tulk. Do not enforce a positive repair covenant against a successor just because it appears on the register: the register can give notice of a restrictive covenant, but it cannot make a positive burden run. Do not allow annexation where the dominant land cannot be identified. Do not confuse freehold running of covenants with the Landlord and Tenant (Covenants) Act 1995, which is a leasehold statute. Modification or discharge by the Upper Tribunal (Lands Chamber) under section 84 LPA 1925 is a separate, statutory safety valve; it is not the test for whether the covenant bound the defendant in the first place.