Freehold Covenants — SQE1 FLK2 Land Law

A house and the cottage beside it stand under one roof. When the cottage was sold off, the owner of the house covenanted, for himself and his successors, to keep in repair the part of the roof lying over the cottage. Years pass. Both properties change hands. The roof leaks. Can the new owners of the cottage make the new owner of the house mend it? No. They cannot.

Not at common law, not in equity, and no drafting will fix it. That is the most important rule in this topic, and it feels wrong the first time you meet it. This is Freehold Covenants, where two questions decide everything. Who has the benefit, and who carries the burden. Keep that roof in mind.

Here is the route. First the distinction the whole topic turns on, positive against restrictive. Then how the benefit passes, which is the easy half. Then the burden, which is the hard half, and the two famous cases that divide it. Then the workarounds conveyancers use when the rule bites. And last, discharge, modification and remedies.

Start with the distinction, because everything follows from it. A positive covenant makes you do something. Maintain a fence, paint the woodwork, pay a contribution. A restrictive covenant makes you refrain. Do not build above two storeys, do not run a business, do not park a caravan.

The test is substance, not wording. Ask whether the covenantor can comply by doing nothing at all. If he must act, or put his hand in his pocket, it is positive, however negatively it is dressed. A promise not to permit a wall to fall into disrepair can only be performed by repairing the wall. That is a positive covenant.

Now the benefit, and this is the straightforward half. The benefit of a covenant, positive or restrictive alike, can pass to successors. Four routes. Statutory annexation. Express annexation. Assignment. And a building scheme.

Statutory annexation is the big one. Under s.78(1) of the Law of Property Act 1925 we are dealing with a covenant relating to any land of the covenantee. Such a covenant is deemed to be made with the covenantee and his successors in title, and the owners and occupiers for the time being of the land.

Read that last phrase again. Successors, owners, and occupiers. So where a covenant protects a house, the buyer of the house can sue, and so can her tenant, in his own right, without any assignment from his landlord. The subsection is deliberately wide.

In Federated Homes v Mill Lodge Properties the Court of Appeal held that s.78 works as statutory annexation. Where the covenant relates to, that is touches and concerns, the covenantee's land, the benefit is annexed to that land automatically. No words of annexation. No assignment. It simply passes with the land, and a transfer that says nothing about it changes nothing.

Two qualifications matter. The land to be benefited must be identifiable, from the instrument or the surrounding circumstances. And s.78 gives way to a contrary intention in the instrument. Covenant with the seller personally, and add that the benefit shall not pass, and the statute cannot annex what the parties kept personal.

Express annexation is the older, tidier route. Words in the deed attaching the covenant to identified land. With the seller and his successors in title, for the benefit of the retained land at the top of the hill. That formula fixes the benefit to that land once and for all.

Assignment is the third. The benefit of a covenant is a chose in action, so it can be transferred. Two conditions. The covenant must touch and concern the land. And the assignment must be made at the same time as the land is sold, because the benefit cannot be held back once the land it protects has gone.

Touch and concern deserves its own moment, because it is a real filter. The covenant must affect the land in the way it is occupied or in its value as land, not confer a personal advantage. Would it still be worth anything to the covenantee once she had sold and moved away?

So a covenant not to keep livestock on the field next door touches and concerns the house it protects. A promise to pay a neighbour £500 a year in gratitude for letting you use her drive does not. That is personal, and no statute and no assignment will carry it to her buyer.

The fourth route is the building scheme, and it solves a problem the other three cannot. Annexation attaches the benefit to land the covenantee owns at the date of the covenant. So on an estate sold plot by plot, the buyer of plot one gets nothing from a covenant given years later by plot nine.

A building scheme cuts through that. Where one exists, every plot owner takes both the benefit and the burden, and each may sue any other, whatever the order in which the plots were sold. Each owner is covenantee and covenantor at once.

The requirements are a defined scheme area, sales by a common vendor, and a common set of covenants intended for the mutual benefit of every plot. The purchasers must have bought on that understanding. Identical covenants alone are not enough. If nobody was shown a plan and nothing was said about mutual enforceability, there is no scheme.

And note the limit. A building scheme carries restrictive covenants between plots. It does not rescue positive ones.

Right. The burden. And here the law splits in two. At common law the burden of a freehold covenant does not pass to a successor at all, positive or restrictive, and that is Austerberry v Oldham Corporation. A buyer takes free of promises made by the seller unless he expressly takes them on himself.

Equity supplies the one exception, and a narrow one. Tulk v Moxhay. Mr Tulk owned Leicester Square and sold a plot in it, the buyer covenanting to keep the garden open and unbuilt on. The plot passed to Moxhay, who knew about the covenant and proposed to build anyway. Equity stopped him.

So the burden of a restrictive covenant runs in equity, on four conditions. The covenant must be restrictive in substance. It must touch and concern the land. The claimant must hold the benefit, and the covenantee must have retained land capable of benefiting when the covenant was made. And the burden must be protected against the successor.

That third condition is a trap worth marking. A landowner who sells the whole of her farm, keeping not a single field, and takes a covenant limiting the number of houses, has nothing the covenant can protect. However clearly it is noted on the register, the burden never becomes capable of running.

Now the fourth condition, and this is where old textbooks mislead. In 1848 the test was notice. Today it is protection. In registered land the covenant must be entered as a notice on the charges register of the burdened title, under s.32 of LRA 2002. A registered disposition for valuable consideration then takes effect subject to it, under s.29.

In unregistered land a covenant created after 1925 must be registered as a Class D(ii) land charge. Registration then counts as actual notice to all the world, under s.198 of the Law of Property Act 1925.

Now hold both halves of that in your head, because the exam works it from both ends. If the burden is protected, the buyer is bound though he never read the register and nobody told him. A man who buys at auction without taking official copies is still bound.

And if the burden is not protected, the buyer takes free of it however much he actually knew. An unprotected covenant is postponed to a registered disposition for value. Telling the buyer the day after completion changes nothing. In registered land, priority turns on the register, not on the state of anyone's conscience.

Which brings us back to the roof. Rhone v Stephens. The House of Lords held that the positive covenant to repair did not run, at law or in equity, so the successor to the house was not bound. Equity will restrain a successor from doing something. It will not compel him to perform a promise he never made.

And the argument that the obligation was too closely connected with the land to be ignored was rejected outright. The rule is absolute. Positive burdens do not run. Say that to yourself before you write anything else in a covenant question.

But the original covenantor does not walk away. Privity of contract keeps her liable on her own promise after she has sold. And s.79 of the 1925 Act deems her covenant to be made on behalf of herself and her successors. That is a word-saving provision. It does not shift the burden to the buyer.

So the person entitled to the benefit sues the original covenantor for damages, and the original covenantor looks to whatever indemnity she took when she sold. Which is precisely why a seller of burdened land should always take one.

There is one genuine qualification, and it is narrow. Mutual benefit and burden. A successor who claims a benefit conferred by a transaction must also take the burden tied to it. In Halsall v Brizell, successors who used the estate roads and drains had to contribute to their upkeep.

But Rhone v Stephens confined it. The burden must be relevant to, and conditional on, the benefit actually taken. And the successor must in principle be able to give the benefit up and escape the burden with it. So a woman whose transfer grants her the estate road subject to paying a fair proportion must pay for as long as she drives it.

Change the facts and it dies. A buyer of a field with its own gateway, who never uses the neighbouring track, takes no benefit at all. No amount of covenanting by her predecessor will make her repair it.

Because the rule bites, conveyancing has built workarounds, and they are examinable. Three worth knowing. First, and most common, a fresh deed of covenant. The sale is made conditional on the buyer covenanting directly with the person entitled to the benefit. That is the buyer's own promise, so privity supplies what covenant law will not.

Repeat that on every sale and you get a chain, each owner directly liable for his own period of ownership. In practice it is backed by a restriction on the register, so no transfer can be registered until the new deed has been given. That cures the weakness of a bare chain of indemnities, where you sue backwards through predecessors who may be insolvent or abroad.

Second, the estate rentcharge. An annual sum charged on the land itself, with a right of re-entry if it goes unpaid, applied to maintaining the common parts. The Rentcharges Act 1977 stopped most new rentcharges but expressly preserved this one. Because a rentcharge is an interest in the land, the liability binds every successive owner.

Enforcement of estate rentcharges is being reformed by the Leasehold and Freehold Reform Act 2024. It restricts the old remedies and requires notice before enforcement, though not all of it is yet in force.

Third, the leasehold structure. Grant each occupier a long lease, conventionally 999 years, and put the positive obligations in the lease. The burden of a covenant touching and concerning the demised premises passes with the term, so the landlord can enforce a service charge against whoever holds the lease.

Two things left. Getting rid of a covenant, and remedies. Section 84 of the 1925 Act lets the Upper Tribunal discharge or modify a restriction on freehold land, which matters because restrictive covenants can last for ever.

Four grounds. Ground (a), the restriction ought to be deemed obsolete by reason of changes in the character of the property or the neighbourhood. A covenant imposed in 1950 to preserve a street of large houses, in a street that is now offices, is the paradigm.

Ground (aa), that the restriction impedes some reasonable use of the land. But that ground never stands alone. It is available only where the restriction secures no practical benefit of substantial value or advantage, or is contrary to the public interest, and money will be adequate compensation. Those conditions are cumulative.

So an objector whose garden would be overlooked, and whose seclusion the Tribunal accepts money cannot replace, defeats the application however reasonable the proposed houses are. Ground (b) is that those entitled have agreed, expressly or by implication. Ground (c), that discharge would not injure them. And on any ground the Tribunal may order compensation.

Finally remedies. For a restrictive covenant the primary remedy is an injunction, and it may be mandatory, requiring what has been built to be pulled down. That the work is finished is no bar, and a defendant who pressed on after being warned can expect little sympathy.

But the court may award damages in lieu of an injunction, under s.50 of the Senior Courts Act 1981, where an injunction would be oppressive. Where fourteen houses stand finished and occupied by innocent families, demolition is unlikely, and damages are assessed as the sum the covenantee could reasonably have demanded for relaxing the covenant.

A word on how SQE1 tests this. You will not be asked to recall case names or section numbers. You get a scenario and five answers, and you pick the best. The names here are memory pegs, and this topic has unusually good ones.

If you keep only three. Rhone v Stephens, the roof over the cottage, because positive burdens never run. Tulk v Moxhay, Leicester Square, because restrictive burdens do, if the burden is protected. And s.78, because the benefit annexes itself to the land without anybody drafting a word.

Four traps. One. It is protection, not knowledge. An unprotected covenant fails against a buyer for value who knew all about it, and a protected one binds a buyer who never looked.

Two. The covenantee must have retained land capable of benefiting when the covenant was made. Sell everything and keep nothing, and there is no burden that can run, whatever the register says.

Three. Annexation fixes the benefit to the land the covenantee owned at the date of the covenant. So on an estate sold off over years, an early buyer gets nothing from a later buyer's covenant. Only a building scheme cures that, and identical covenants alone do not make a scheme.

Four. If the benefited and burdened land come into the same ownership and occupation, a restrictive covenant is extinguished by unity of seisin. It does not revive when the two are split again, and a stale entry on the register protects nothing.

Quick check. A man sold half his garden for a house to be built. The buyer covenanted, and here are the words, not to permit or suffer the boundary wall between the two properties to fall into disrepair. Ten years later the buyer sold the house on. The covenant was entered as a notice on the charges register before that sale. The new owner has ignored the wall.

Is the new owner bound? Three answers. One: yes, because the covenant is worded as a prohibition, and negative burdens run in equity. Two: yes, because it was protected by a notice on the register before he bought. Three: no, because although negatively worded it can only be performed by spending money, so in substance it is positive. Pause here if you want a moment.

The answer is three. Whether a covenant is restrictive or positive turns on substance, not on wording. Ask whether the covenantor can comply by doing nothing. A promise not to permit a wall to fall into disrepair can be kept only by repairing the wall, so it is a positive covenant in negative clothing. The burden does not run.

Why the others fail. Option one takes the drafting at face value, which is the trap itself. Option two is the better one, because everything it says is true: the covenant really was protected on the register. But protection answers the fourth Tulk v Moxhay condition, and you never reach that condition unless the covenant is restrictive. Registration cannot make a positive burden run.

Five things to take away. One: positive or restrictive is decided by substance, so ask whether the covenantor can comply by doing nothing. Two: the benefit of any covenant passes, by statutory annexation under s.78, by express annexation, by assignment, or through a building scheme. Three: at common law no burden runs at all.

Four: in equity a restrictive burden runs on four conditions, and the modern fourth one is protection on the title, not notice. Five: a positive burden never runs. That is why our leaking roof stays unmended, and why conveyancers reach for a fresh deed of covenant, an estate rentcharge, or a long lease. Next time, Mortgages.

Practise this topic with exam-style questions at sqe1prep.co.uk. This episode is for education and exam revision only, not legal advice, and we are not affiliated with or endorsed by the SRA or Kaplan.