What are Covenants?
25 July 2017
In simple terms a covenant is a legal promise to do or not do something and is only acquired by agreement.
In respect of property, covenants are used to describe conditions tied to the land. Covenants tied to the land can either be positive or restrictive.
Traditionally positive covenants usually involve some sort or expenditure or action. So for example, John promises Bob to fence along a boundary, or John promises Bob to pay maintenance costs for a shared driveway.
Because positive covenants require some form of expenditure the Courts are reluctant to make them enforceable when a new purchaser acquires the land. This means a positive covenant cannot ‘run with the land’. In other words the promise does not pass with the land and on to the new owners. So if John sells to Adrian, Adrian is not bound by the original covenant given to Bob.
While a positive covenant cannot pass on, if you gain some sort of benefit you could be required to pay for it.
A personal covenant is a promise by one person given to another and does not affect the land and does not pass to successive owners of the property either.
Restrictive covenants restrict the use of the land in some way. So for example, John agrees to a covenant not to build on the land without Bob’s consent, or John agrees not to do anything on the property which would cause annoyance to Bob.
Covenants ‘running with the land’ mean the covenant is annexed to the land and the land cannot be transferred without it. So unlike positive covenants, restrictive covenants can pass with the land, but only if:
- The covenant touches and concerns the land
- The original intent is that the covenant would bind future owners of the land
This means each successor in title (or every purchaser of the land) is either subject to the burden of the covenant or is entitled to the benefit. So when selling the land the purchaser has to agree taking the land subject to the covenant. The land is therefore burdened by a restrictive covenant.
Where all neighbours have reciprocal benefits and burdens, they could be required to pay for the upkeep. This might include home owners who have the benefit of using an estate road, the drains, or a promenade.
A leasehold covenant is an agreement between a landlord and their tenant. The lease itself details the covenants governing the use of the property. These covenants are expressed, although there are also implied covenants (meaning they are not expressly written into the lease).
In terms of a lease there is something called a privity of contract between the original parties to the lease. All covenants in the lease are therefore enforceable by and against the original parties. In some circumstance the original tenant remains liable even after the lease has been sold (called ‘assignment’) but this does depend on when the lease was granted.
For leases granted before 1st January 1996, the original tenant can be sued for a breach of contract committed by the new tenant. There are however implied covenants, some of which are that the new tenant will:
- Pay the rent
- Comply with the covenants and conditions in the lease
- Keep the original landlord and the landlord’s successors indemnified for failure to pay rent or comply with the covenants and conditions
For leases granted after 1st January 1996, the original tenant cannot be sued for a breach of contract committed by a new tenant. The covenants implied into leases before 1st January 1996 are therefore not implied into these leases.