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Land Law - Passing The Benefit of Convenants in Law Between Successors in Title.
Having examined the transfer of responsibility under common law, we must now determine whether the legal transfer of either a favorable or limiting agreement has occurred. This situation occurs when the initial party that made the agreement sells or transfers their land, which includes the advantages of the original agreement. There are several methods to accomplish this: Through the specific assignment authorized by section 36 of the Law of Property Act 1925. The original covenantee must assign the benefit of the covenant simultaneously with the transfer of the land to the successor in title, as mandated by the Contracts (Rights of Third Parties) Act 1999. If the third party is explicitly named, they will have the same advantage under section 56 of the Law of Property Act 1925. If the third party was identified at the time the covenant was established, then that individual is eligible to receive benefits from the covenant. For the benefit of the covenant to run in law several conditions must be met: the covenant must ‘touch and concern’ the land, the original covenantee must have held legal estate in the benefited land,the successor in title must obtain their title from or under the original covenantee, and the benefit of the covenant must have been intended to run with the land.
There are three methods to prove this: - by explicit annexation - through implicit annexation - through section 78 of the Law of Property Act 1925.
The covenant must ‘touch and concern’ the land
The benefit of a covenant will pass to a successor in title, provided the covenant is beneficial to the land itself and not simply a benefit to the original covenantee personally. A good tip is to look at whether the covenant affects the way in which the land can be used or its value.
At the date of the covenant, the original covenantee held a legal estate in the benefited land
So, the covenantee must hold one of the recognised legal estates in land. The benefit of a covenant would not pass if the original covenantee only held an equitable interest in the land.
The successor in title must obtain their title from or under the original covenantee
Pre-1925 covenants required that the successor in title held the same legal estate as the original covenantee, so if the original legal estate was freehold then the successor in title must also hold a freehold estate in the land. However, post-1925 covenants do not have the same requirement, so where the original covenantee held a freehold estate but then later grants a leasehold estate, the covenant can still be enforced by that successor in title.
The benefit of the covenant was intended to run with the land
This is where you may hear the term ‘annexed’ or ‘annexation’, which
can be separated into the three categories set out below:
by express annexation
by implied annexation
by s 78 LPA 1925
Key term: annexation
Annexation means the permanent attachment of a covenant to the benefited land, in such a way that the benefit of the covenant will pass on any transfer of the land.
by express annexation
This is where some form of words of annexation are used in the deed, expressly stating that the covenant will benefit a specific piece of land, and that it is intended to pass to successive owners of the land. In these circumstances, the benefit of the covenant will pass automatically with the land to future owners.
by implied annexation
The Court may be prepared to imply that the benefit of the covenant will pass to successors in title if the facts of the case show the identity of the land being benefited is sufficiently clear. However, these are used very rarely due to the availability of both express annexation and statutory
provisions of s 78 LPA 25.
Statutory Annexation under Section 78 LPA 1925
It means that every covenant which is held to touch and concern the land will automatically be annexed to the land in question, with the benefit of that covenant automatically passing to successors in title in equity. This has in some way resolved the issues of express and implied annexation.
Dina owns two adjoining properties, numbers 2 and 4 Beswick Close.
Dina sells number 4 to Ken so Dina is the original covenantee under the conveyance and Ken is the original covenantor. Within the conveyance there is a covenant stating, ‘with and for the benefit of Dina and his successors in title and the owners of number 2 Beswick Close, not to use number 4 Beswick Close for occupation by more than one family at a time’.
Dina sells his property to Marie. Kenny then starts construction work to convert number 4 Beswick Close into a house of multiple occupation to let out to students. Can Marion enforce this covenant against Ken?
Yes, she can.
Firstly, she can prove that the covenant ‘touches and concerns’ the land as covenants of this type have been held
to satisfy this condition.
Dean held legal title at the time the covenant was made and
so the second condition is met.
Marion’s title can easily be traced back to the original conveyance made between Dina and Kenny.
Finally, it is also intended, by the wording of the deed, that the benefit of this covenant would pass to successors in title.
Having examined the transfer of responsibility under common law, we must now determine whether the legal transfer of either a favorable or limiting agreement has occurred. This situation occurs when the initial party that made the agreement sells or transfers their land, which includes the advantages of the original agreement. There are several methods to accomplish this: Through the specific assignment authorized by section 36 of the Law of Property Act 1925. The original covenantee must assign the benefit of the covenant simultaneously with the transfer of the land to the successor in title, as mandated by the Contracts (Rights of Third Parties) Act 1999. If the third party is explicitly named, they will have the same advantage under section 56 of the Law of Property Act 1925. If the third party was identified at the time the covenant was established, then that individual is eligible to receive benefits from the covenant. For the benefit of the covenant to run in law several conditions must be met: the covenant must ‘touch and concern’ the land, the original covenantee must have held legal estate in the benefited land,the successor in title must obtain their title from or under the original covenantee, and the benefit of the covenant must have been intended to run with the land.
There are three methods to prove this: - by explicit annexation - through implicit annexation - through section 78 of the Law of Property Act 1925.
The covenant must ‘touch and concern’ the land
The benefit of a covenant will pass to a successor in title, provided the covenant is beneficial to the land itself and not simply a benefit to the original covenantee personally. A good tip is to look at whether the covenant affects the way in which the land can be used or its value.
At the date of the covenant, the original covenantee held a legal estate in the benefited land
So, the covenantee must hold one of the recognised legal estates in land. The benefit of a covenant would not pass if the original covenantee only held an equitable interest in the land.
The successor in title must obtain their title from or under the original covenantee
Pre-1925 covenants required that the successor in title held the same legal estate as the original covenantee, so if the original legal estate was freehold then the successor in title must also hold a freehold estate in the land. However, post-1925 covenants do not have the same requirement, so where the original covenantee held a freehold estate but then later grants a leasehold estate, the covenant can still be enforced by that successor in title.
The benefit of the covenant was intended to run with the land
This is where you may hear the term ‘annexed’ or ‘annexation’, which
can be separated into the three categories set out below:
by express annexation
by implied annexation
by s 78 LPA 1925
Key term: annexation
Annexation means the permanent attachment of a covenant to the benefited land, in such a way that the benefit of the covenant will pass on any transfer of the land.
by express annexation
This is where some form of words of annexation are used in the deed, expressly stating that the covenant will benefit a specific piece of land, and that it is intended to pass to successive owners of the land. In these circumstances, the benefit of the covenant will pass automatically with the land to future owners.
by implied annexation
The Court may be prepared to imply that the benefit of the covenant will pass to successors in title if the facts of the case show the identity of the land being benefited is sufficiently clear. However, these are used very rarely due to the availability of both express annexation and statutory
provisions of s 78 LPA 25.
Statutory Annexation under Section 78 LPA 1925
It means that every covenant which is held to touch and concern the land will automatically be annexed to the land in question, with the benefit of that covenant automatically passing to successors in title in equity. This has in some way resolved the issues of express and implied annexation.
Dina owns two adjoining properties, numbers 2 and 4 Beswick Close.
Dina sells number 4 to Ken so Dina is the original covenantee under the conveyance and Ken is the original covenantor. Within the conveyance there is a covenant stating, ‘with and for the benefit of Dina and his successors in title and the owners of number 2 Beswick Close, not to use number 4 Beswick Close for occupation by more than one family at a time’.
Dina sells his property to Marie. Kenny then starts construction work to convert number 4 Beswick Close into a house of multiple occupation to let out to students. Can Marion enforce this covenant against Ken?
Yes, she can.
Firstly, she can prove that the covenant ‘touches and concerns’ the land as covenants of this type have been held
to satisfy this condition.
Dean held legal title at the time the covenant was made and
so the second condition is met.
Marion’s title can easily be traced back to the original conveyance made between Dina and Kenny.
Finally, it is also intended, by the wording of the deed, that the benefit of this covenant would pass to successors in title.
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