Benefit and burden of positive covenants

7 January, 2014

Not all covenants affecting land automatically bind successive owners when land is sold on.

Positive covenants, being covenants to expend money or otherwise to take some positive action such as to maintain a fence or a private road do not so “run with the land”, although the original contracting party does remain bound.

 

There are various tried and tested ways of dealing with this situation to ensure that, in effect, successive owners of the land are nevertheless bound to perform positive covenants.

 

Commonly, a new owner at the time of purchase is required to enter into a deed of covenant direct with the person entitled to the benefit of the covenant.  The deed confirms that the new owner will perform the covenant and will not sell the land unless a similar deed is obtained on sale from any subsequent purchaser and so on.  The position is also usually protected at the Land Registry so that a sale cannot be registered unless and until such a deed is given and the Land Registry informed of that fact.

 

However, where no such mechanism exists the courts have had to look at ways in which the burden of positive covenants might nevertheless run with the land.  That has given rise to the benefit and burden principle developed by the courts.

 

Briefly, this principle developed in a 1957 case which established that a party may not take a benefit without accepting the burden that goes with it.

 

The case concerned a covenant, by the beneficiary of a right to use a road, to pay a contribution towards the cost of maintaining the road.

 

The court held that the covenant was unenforceable against the beneficiary’s successor in title because it was a positive covenant that did not run with the land. However, the court went on to state that the successor in title was not entitled to the benefit of the right of way without also undertaking the burden of the obligations in the original deed i.e. the obligation to contribute to the road’s maintenance.

 

The exercise of the right of way was therefore made conditional on compliance with the positive covenant to contribute to its maintenance.

 

This principle has been developed further over the years and in a 2009 case the court established three conditions which must be satisfied for the burden of a positive covenant to be enforceable against an original contracting party’s successor:

• The benefit and burden must be conferred in, or by, the same transaction.
• The benefit must be conditional on, or reciprocal to, the burden.
• The party subject to the burden must have had the opportunity to reject the benefit, not simply the right to receive the benefit.

 

The courts have recently demonstrated that the principle is alive and well in a 2013 case, Goodman and others v Elwood [2013]. The case serves as a useful reminder of the principle developed by the courts and involved a landowner’s obligation to contribute to the maintenance of a private road.  The specific facts of the case are a little convoluted, but essentially the principle was upheld and the beneficiary of a right of way was only entitled to use such right of way if it also paid its corresponding maintenance contribution. 

Reviewed in 2015