A freehold covenant is a promise made by one freehold landowner (the covenantor) to another (the covenantee) about how the land will or will not be used. It is a contract that binds the land, not just the parties. The key question in freehold covenant law is whether the covenant 'runs with the land' - that is, whether it continues to bind (or benefit) successors in title after the original parties have sold their land.
Freehold covenants come in two types: positive covenants (requiring the covenantor to do something, e.g. maintain a fence) and restrictive (negative) covenants (requiring the covenantor NOT to do something, e.g. not to build above two storeys). The distinction is crucial because the rules for passing the burden differ dramatically between the two types.
Three areas dominate SQE1 questions: (1) Does the benefit of the covenant pass to a successor? (2) Does the burden of the covenant pass to a successor? (3) What remedies and defences are available? The critical rule: the burden of a POSITIVE covenant does NOT run in equity. Only RESTRICTIVE burdens can run in equity (Tulk v Moxhay).
| Feature | Positive Covenant | Restrictive Covenant |
|---|---|---|
| Nature | Requires the covenantor to DO something | Requires the covenantor to NOT do something |
| Examples | Maintain a fence, pay a contribution, build a house | Not build above two storeys, not use for business, not keep animals |
| Burden runs at common law? | No (Austerberry) | No (Austerberry) |
| Burden runs in equity? | No (Rhone v Stephens) | Yes (Tulk v Moxhay) |
| Benefit runs? | Yes (LPA 1925 s.78, annexation, assignment) | Yes (LPA 1925 s.78, annexation, assignment) |
The burden of a positive covenant NEVER runs - not at common law, not in equity. If A covenants to maintain a fence, and sells to B, the original covenantee C cannot force B to maintain the fence. B simply has no obligation. This is the most important rule in freehold covenant law.
The benefit of a freehold covenant (both positive and restrictive) can pass to successors in title. There are three main ways this can happen: statutory annexation under LPA 1925 s.78, express annexation, and assignment. Additionally, building schemes provide a special route for the benefit to pass within a development.
A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and the owners and occupiers for the time being of the land, and shall have effect as if such successors, owners, and occupiers were expressed.
Section 78 provides that the benefit of a covenant relating to the covenantee's land automatically passes to the covenantee's successors in title, the owners of the land, and the occupiers. This applies regardless of whether the covenant is positive or restrictive. It is a statutory rule that works alongside common law and equitable rules for passing the benefit.
For s.78 to operate, the covenant must 'relate to' the covenantee's land. In Federated Homes v Mill Lodge Properties [2010], the Supreme Court held that a covenant to pay a service charge DID relate to the covenantee's land even though the covenantee (a management company) did not own any land. The covenant was for the benefit of the estate as a whole.
[2010] EWCA Civ 1292
A management company (which did not own any land) had a covenant from residents to pay service charges. When some residents refused to pay, the question was whether the benefit of the covenant passed to the management company.
The Court of Appeal held that the covenant did 'relate to land' within s.78 because it was connected with the management of a defined estate of houses. The benefit could pass to the management company even though it owned no land itself.
A covenant 'relates to land' under s.78 if it affects the land as a whole or the estate in which the land is situated, even if the covenantee does not own any land.
The benefit of a covenant can be expressly annexed to specific land. The covenant will state that it is for the benefit of a particular property (e.g. 'the covenant is for the benefit of 2 Oak Road and its successors in title'). If the covenant identifies the benefited land with sufficient certainty, the benefit will automatically pass to anyone who acquires that land.
The benefit can also pass by assignment. When the original covenantee sells the benefited land to a successor, the benefit can be expressly assigned (transferred) as part of the sale. The covenant must 'touch and concern' the land - it must affect the land itself, not merely be a personal obligation. For example, a covenant not to build above two storeys touches and concerns the land; a promise to pay the covenantee a personal sum does not.
A building scheme (or scheme of development) is a special arrangement that allows both the benefit AND the burden of restrictive covenants to run between all the properties in a development. In a normal situation, only the original covenantee can enforce the covenant. But in a building scheme, every homeowner in the estate can enforce the covenants against every other homeowner.
In a building scheme, each plot owner is both covenantee AND covenantor. Plot A can enforce the covenants against Plot B, and Plot B can enforce against Plot A. This mutual enforceability is unique to building schemes and is a favourite exam topic.
This is where freehold covenant law gets tricky. The rules for passing the burden depend on whether the covenant is positive or restrictive. At common law, the burden NEVER runs (Austerberry). In equity, the burden of a RESTRICTIVE covenant CAN run (Tulk v Moxhay), but the burden of a POSITIVE covenant does NOT run (Rhone v Stephens).
| Benefit | Burden | |
|---|---|---|
| Positive Covenant | Yes - runs by s.78, annexation, or assignment | No - never runs (Rhone v Stephens) |
| Restrictive Covenant | Yes - runs by s.78, annexation, or assignment | Yes - runs in equity (Tulk v Moxhay) |
| At Common Law | Yes | No (Austerberry) |
(1885) 29 Ch D 750
The defendant acquired land subject to a covenant to maintain a road. When the defendant failed to maintain it, the original covenantee (not the successor) sought to enforce the covenant against the defendant.
Fry J held that the burden of a covenant does NOT run with the land at common law. A successor in title is not bound by covenants made by their predecessor unless they expressly assume the obligation.
The burden of a freehold covenant does not run at common law. This applies to both positive and restrictive covenants. A purchaser takes the land free of any covenant obligations made by the seller, unless they expressly agree to be bound.
(1848) 2 Ex Ch 759
Mr Tulk owned Leicester Square. He sold a plot to a purchaser who covenanted not to build on it, preserving the open square. The purchaser later sold to Moxhay, who had notice of the covenant and proposed to build anyway. Tulk sought to enforce the covenant against Moxhay.
The Court of Chancery held that Moxhay was bound by the restrictive covenant in equity because he had notice of it when he purchased. The burden of a restrictive covenant runs in equity against a purchaser with notice.
The burden of a RESTRICTIVE covenant runs in equity if: (1) the covenant is negative (restrictive) in nature; (2) the covenant touches and concerns the land; (3) the original covenantee still owns the benefited land (or the benefit has passed); and (4) the successor purchaser had notice of the covenant (actual, constructive, or imputed).
For the burden to run under Tulk v Moxhay, the purchaser must have notice. If the covenant is entered on the land charges register (for unregistered land) or the charges register (for registered land), the purchaser is deemed to have constructive notice and will be bound. Even if it is not registered, actual notice (being told about it) or imputed notice (their solicitor knew) will suffice.
[1994] 2 AC 310
A cottage was served by a water pipe that ran through a neighbouring property. The original owner of the cottage had covenanted with the owner of the neighbouring property to maintain the pipe. When the cottage was sold, the neighbour tried to enforce the maintenance covenant against the new owner of the cottage.
The House of Lords held that the positive covenant to maintain the pipe did NOT run with the land. The new owner of the cottage was not bound by the maintenance obligation.
The burden of a POSITIVE covenant does NOT run in equity. No matter how reasonable it seems, a successor cannot be forced to perform a positive obligation created by their predecessor. This is a fundamental rule of freehold covenant law and cannot be circumvented by clever drafting.
In Rhone v Stephens, the House of Lords rejected arguments that the positive burden should run because it was 'so closely connected' with the land. The rule is absolute: positive burdens do not run, period. This creates real practical problems (e.g. who maintains shared facilities?) and leads to the 'workarounds' discussed later.
Only a person who has the benefit of the covenant can enforce it. This means the original covenantee, or a successor who has acquired the benefit (through s.78, annexation, assignment, or a building scheme). The person against whom the covenant is enforced must be bound by it (the original covenantor or a successor with notice for restrictive covenants).
Section 84 of the LPA 1925 allows the Lands Tribunal (now the Upper Tribunal) to modify or discharge restrictive covenants. This is important because restrictive covenants can last indefinitely and may become obsolete or unreasonable over time. The Tribunal has the power to release or modify covenants that are no longer practical.
The Upper Tribunal may, on application, discharge or modify any restriction at any time if it appears to the Tribunal that the restriction is obsolete, or impedes some reasonable use of the land, or that the person who is entitled to the benefit has agreed, or that by reason of changes in the character of the property or neighbourhood the restriction ought to be deemed discharged.
When considering an application, the Tribunal must weigh the injury to the person entitled to the benefit against the advantage to the applicant. Even if the restriction impedes a reasonable use, the Tribunal will not discharge it if the injury to the benefited landowner is significant and cannot be adequately compensated by money.
Because the burden of a positive covenant does not run (Rhone v Stephens), developers and conveyancers have devised several workarounds to achieve the same practical result. These are commonly tested in the SQE1.
A rentcharge is an annual sum payable by the owner of freehold land to another person. Unlike positive covenants, rentcharges DO run with the land - every successor is liable to pay. The rentcharge can be used to fund maintenance of shared facilities. However, the Rentcharges Act 1977 prevents the creation of new rentcharges (except estate rentcharges).
Estate rentcharges are the main surviving type. They are created by developers to fund the maintenance of common areas (roads, gardens, drainage) on a housing estate. The Rentcharges Act 1977 allows estate rentcharges and provides an enforcement mechanism. The Management of Estates etc. (England and Wales) Regulations 2024 now provide a comprehensive framework for their enforcement.
A conditional contract approach works like this: when selling Plot A (subject to a positive covenant), the seller makes the sale conditional on the buyer entering into a deed of covenant. Because the buyer signs a fresh deed, the obligation is their own - it does not rely on 'running' from the predecessor. This is the most straightforward workaround.
In a chain of transactions, all parties can exchange contracts simultaneously, with each buyer covenanting directly with the original covenantee. This creates a 'chain of covenants' where each successor has their own direct obligation. It is administratively complex but legally effective.
Another workaround is to use a leasehold structure. A developer grants long leases (e.g. 999 years) to each plot owner. The positive obligations are contained in the lease covenants, which DO run with the leasehold estate (unlike freehold covenants). The landlord can enforce the lease covenants against each tenant. This is common in retirement developments and shared ownership schemes.
The burden of leasehold covenants DOES run because the leasehold estate is a limited interest. Under the Landlord and Tenant (Covenants) Act 1995, both the benefit and burden of leasehold covenants can pass to successors. This is why developers often use leasehold structures for estates with shared facilities - it avoids the Rhone v Stephens problem entirely.
The benefit passes by: B - Building schemes, R - Running by statute (s.78 LPA 1925), A - Annexation (express), N - (a)ssignment. BRAN helps you remember all four ways the benefit can pass.
Restrictive burdens RUN (Tulk v Moxhay) if the successor has notice. Positive burdens NEVER run (Rhone v Stephens). This is the single most important rule in freehold covenant law. If you remember nothing else, remember this.
REAL = Rentcharges, Estate rentcharges, Assignment of new covenants, Leasehold structures. These are the four main workarounds for the positive covenant problem.