Covenants are obligations comprised in a document which is executed as a deed. In the context of land, they subsist as contractual obligations between the original parties to the deed. As a general rule, covenants being contractual obligations do not generally continue to bind the successors to the original parties. However, in the context of property law, certain type of covenants relating to the property/land itself, continue to bind the successors of the original covenantor and covenantee as owners of the relevant property.
The relevant rules were reformed by the 2009 Land Law legislation. The 2009 legislation applies to covenants entered after 1st December 2009. There are some issues of interpretation as to its scope.
Under both the pre-2009 and post-2009 legislation, a third party may take the benefit of a covenant in relation to land, whether or not named in the relevant deed. The covenant must relate to land. Purely personal covenants are not enforceable in this way. Generally, the original covenantee who has parted with the property may not enforce a covenant which is for the benefit of land and is not for his benefit in the personal capacity.
Covenants are fully enforceable between landlord and tenant where they relate to the land. Since 1860, they have automatically bound successors to the original parties as landlord and tenant. Leasehold covenants may contain both negative and positive obligations. They are enforced by the landlord and tenant for the time being of land. The original lessee is released on completion of a valid assignment.
The general principle is that the burden (i.e. the obligations) of freehold covenants are not placed on successors of the original covenantor. Because of this position, methods were sought to make successors effectively liable on covenants. The original covenantor will remain liable on the obligation, even after he sells the land. He should require an indemnity from his successor an undertaking from them to abide by the covenant.
Means of Enforcement
Ultimately, there may be a chain of indemnities so that the current owner is bound by the covenant, whether positive (and involving expenditure and acts) or negative requiring a person to refrain from acting. In this case, if the original covenantor is sued by way of enforcement of the covenants, he may join each of the successors to the proceedings, provided that there is a complete chain of indemnities down to the current owner.
The principle of reciprocal covenants applies where each of two parties, each covenantor and covenantee, make and respectively, take the benefit of the same, equivalent or corresponding covenants. The reciprocity principle may also apply, where there is a link between the covenant made and the covenant enjoyed.
Reciprocal covenants typically apply to housing estates where the same common obligations are placed on all owners, designed for the mutual benefit of each. Such a covenant might, for example, provide for a contribution to the cost of maintenance and repair of common parts and access roads.
Must benefit the Land as Such
The burden must be linked to the covenant or benefit received. It must be relevant to the right which allows the benefit to be received. The successors must have the opportunity to choose whether to take the burden of the covenant or not. Having taken the land with the relevant benefit and chosen not to renounce it, they must take the burden.
A similar principle applies to support mutually enforceable restrictive covenant in a building scheme. Where there is a building scheme the benefit and burdens of mutual covenants which each or most enjoy, accrue for the benefit of all owners.
It is possible to provide covenants which bind the owner of the freehold land, by providing that the freehold interest is subject to the condition of compliance of the covenant. In this case, the seller or predecessor retains a right of entry to terminate the estate for breach of the freehold estate. A conditional fee has been abolished under the land law reform, but an equivalent arrangement can be put in place under a trust.
Long leaseholders, who in substance own the land ( long lease term, low fixed rent) may acquire the freehold interest. In some cases, the statutes preserve the covenants and conditions affecting the former leasehold, even after it has been converted into a freehold interest.
When the freehold interest in the buildings are acquired under ground rents legislation, the general position is that lease no longer subsists and that the leasehold covenants cease to apply. No new covenants may be created thereafter “except with the person’s agreement”.
The legislation provides that certain covenants continue to apply. Covenants to protect or enhance the amenity of land occupied by the immediate ground landlord, those which relate to the performance of a statutory duty by such person relate to a right of way of the acquired land, right of drainage or other rights which to secure or assist the development of other land, continue to be enforceable.
Leases for Ever
Prior to the recent land law reforms, it was possible to grant a lease for ever under Irish law. This was a fee farm grant. Covenants in a lease for ever were enforceable automatically between successors, whether positive or negative in nature, provided that they related to the property concerned. This is because they were leases, albeit leased in perpetuity. Leasehold law applied.
The 2009 land law reforms prohibited the creation of new fee farm grant. It such an interest is purported to be created, it is deemed freed and discharged from any covenant or other provision relating to rent provided that other covenants or provisions continue in force and so far as they are consistent with the nature of a fee simple interest. The provision is of limited effect because the 2009 Act itself has modified freehold covenants.
Under the older mechanism for the purchase of the freehold, including the Conveyancing Act and the Renewable Leasehold Conversion Act by which the existing lease for life renewable for ever or converted into fee farm grant, the covenants and conditions in the underlying lease were preserved. eases for lives renewable for ever were commonly granted in the 18th century and early 19th century during the penal laws. They gradually acquired freehold status by recognition of the equity to renew.
Negative Covenants Benefiting the Land as Such
Negative (or restrictive) covenants may be enforceable under a different principle. A person who purchases land with notice of the burden of (obligation) of such a covenant (typically restricting the land in some way), is bound to take the land with that covenant, subject to certain conditions. A purchaser who buys without notice of the covenant is not affected.
The principle does not apply to positive covenants, which require action or expenditure. A covenant will be a positive covenant where in substances it requires expenditure even if expressed in negative language. If a covenant contains both positive and negative elements, the positive elements may be severed, so that the negative or restrictive elements only, remain to bind subsequent owners.
Restrictive covenants typically restrict the land affected from being used for a particular purpose, or from being developed in some way or at all. The deed which creates the covenant must show an intention that the burden or obligation should bind successors. The successor must purchase the same estate or interest, as the original covenantee.
Running of the Benefit
In contrast to the burden of a covenant, the benefit of a covenant will more readily “run” for the land intended to be benefitted. Generally, the benefit of a covenant relating to the land runs automatically, for the benefit of successors, provided that this is the intention expressed by the relevant deed.
The covenant must benefit the land as such and must not be personal in nature. There must be an intention, expressed or necessarily implied that the benefit should run. Covenants concerning land are typically made for the benefit of the covenantee, its successors and assigns. This wording assists but does not necessarily conclusively show that the covenant is intended to benefit bind the land as such. There must be an intention to benefit the land, which is commonly evident from the nature of the covenant.
It may be the case that the successor must own all the benefitted plan. There are no Irish cases on the point, but this appears to be the position in England. The successor may be able to enforce in equity. After the 2009 Act, “land” includes any part of the land, which implies that the successor as to part, may enforce the covenant.
The benefit of a positive covenant may pass by law. The covenant need not affect the land owned by the covenantor. It must benefit the land of the covenantee.
The benefit of a contract may be expressly assigned on general principles. However, this will not necessarily allow the successor of the covenantee, with the benefit of the covenant to enforce it against successors of the covenantor. A successor to the covenantor who buys property without notice of the covenant is not affected by it.
Equitable Enforcement I
Common law and equity apply slightly different rules in relation to the enforceability of covenants, by and against successors of the original parties. Generally, the benefit of the covenant runs for the benefit of successors under common law principles, However, it ran only for the benefit of successors, who hold the legal estate.
The benefit of the covenant at common law did not confer the benefit of equitable remedies particularly the injunction, which is the principal method of enforcing a covenant against use. Therefore the rules as to whether equity recognises the passing of the benefit were and remain of practical importance and relevance.
Equity requires that the covenant must be “annexed” to the land. This may be express or implied. Annexation requires that there is an intention to benefit the land owned by the covenantee and burden the land of the covenantor. The land benefitted must be ascertained. The covenant must be capable of benefitting the land. The covenant must be intended to run with the ownership and title of the land.
Where the covenant is not expressly annexed, it may be implied annexed where it is implied that it should be annexed in substance.
Equitable Enforcement II
Ideally, there should be a specific assignment of the benefit of the covenants. However, this is not necessary once the covenant is annexed to the land as it passed under “all estate” clause in the Conveyancing Act which includes with the land, all easements and rights attaching to the land.
Automatic assignment of the covenant takes place where the covenant is annexed to the land on creation or at a later date. If the wording of the relevant deed shows an intention to benefit the land, for example, by being made with the owner of the land for the time being, the land concerned is ascertainable and is capable of being benefitted, then provided that benefit is annexed to the land, the benefit of the covenant passes with the land
Where the benefit of the covenant is annexed to the whole of the land, only an assignee of the whole can take it. If it is annexed the whole or part of it an assignee of a part may take the benefit of it.
The effect of the above rules was that prior to the 2009 land law reforms, the benefit of covenants passed to successors provided
- they are negative in nature;,
- reasonably certain in scope;
- were intended to run with the land; and
- in fact benefit the land.
It commonly occurs that in private housing development covenants are imposed to the benefit of the entire estate. There may be, for example, restrictions on building walls in the front gardens or using the property for particular purposes or other developments which might obtain planning permission but might be considered to be against the common aesthetic standards of the estate.
A scheme of covenants may be mutually binding in an estate scheme, provided that the following conditions are complied with;
- each owner derives title from the same original common owner (usually the developer);
- the common owner/developer must have laid out the land for sale in plots,
- the restrictions intended to be imposed on all are consistent with an intended scheme;
- the restrictions are intended to benefit all plots;
- plots must have been bought in the basis of the restriction that they should benefit all plots;
- the area must be relatively defined.
The covenants are reciprocally enforceable by all owners within the scheme. The covenants need not be identical but must be consistent with a single scheme of development.
The courts have extended the above principles and liberalised them somewhat. They need not be a common vendor or a developer in all cases. It is enough that there is a common intention of several vendors to create a scheme. The covenants need not be identical provided that they are similar.
McMahon Legal, Legal Guide Limited and Paul McMahon have no liability arising from reliance on anything contained in this article nor on this website.