Freehold covenants involve someone who is making a promise and suffers a burden (covenantor) and another person who receives the benefit of that promise (covenantee).

When the original owners move on then questions arise as to whether the original burden or benefit can also run with the land. This means having to explore whether the land transfer happens in common law or equity.

In common law the starting point is privity of contract whereby a contract between two people cannot bind individuals who are not party to that contract. However while the courts have held that the burden does not pass (Austerberry v Corporation of Oldham [1885]) it is certainly possible for the benefit to do so when it touches and concerns the land (Smith & Snipes Hall Farm Ltd v River Douglas Catchment Board [1947]).

In equity the case of Tulk v Moxhay [1843] held that the burden
can pass as the purchaser will have notice. To prevent this principle becoming too broad in nature a distinction is made between positive and negative covenants. For positive covenants the covenantor has to actively do something (Hayward v Brunswick Permanent Building Society [1881]) while for negative covenants there is an obligation to refrain from doing something as in Tulk v Moxhay [1843].

The burden of a positive covenant cannot pass in common law and only passes in equity where there are reciprocal burdens and benefits as in Halsall v Brizell [1957]. However this was restricted by Lord Templeman in Rhone v Stephens [1994] where it was held that this principle would not be effective where there is no choice in accepting the burden. The Law Commission has recently suggested that this are should be replace by 'land obligations' in an extensive review of the subject.

Meanwhile for the burden to pass in equity a number of (rather straight forward) requirements must be met:
the covenant must touch and concern the land
proximity (the dominant land must be able to benefit) – Kelly v Barrett [1924]
intention for the burden to run (presumed by s. 79 Law of Property Act 1925
the covenant must be registered
unregistered land – class D(ii) land charge
registered land – notice under ss. 32 & 33 Land Registration Act 2002

When looking at the benefit of a negative covenant running in equity there are three circumstances to consider:
Annexation - where the benefit is permanently attached to the land. For this purpose Federated Homes v Mill Lodge Properties Ltd [1980] interpreted s. 79 LPA25 so that if the covenant touched the land and the dominant land was identified then annexation is automatic.
Assignment - is very similar to annexation and attaches a covenant to the land at a later date. However the conveyance and assignment must be simultaneous (Re Union of London and Smith’s Conveyance [1933]).
Schemes of development - such as housing estates where there are reciprocal enforcement of obligations the area is clearly identified.

Despite privity of contract it is also important to consider the rights of third parties. s. 56 LPA25 enables a person not party to a covenant to sue upon it where the covenant purports to be made with that person (Lyus v Prowsa Developments Ltd [1982]) and the covenantee is clearly identifiable (Re Ecclesiastical Commissioners for England’s Conveyance [1936]).

In certain circumstances unidentified third parties can sue if a covenant was made for their benefit as per the Contracts (Rights of Third Parties) Act 1999.

For breach of a covenant a number of remedies are available:
Quia timet injunction
Injunction to prevent continued breach
Mandatory injunction
Damages in lieu of an injunction where the requirements of Shelfer v City of London Electric Lighting Co. [1895] are met.

Covenants can be modified or discharged by way of applying the Upper Tribunal (Lands Chamber) under one of the four grounds in s. 84 Law of Property Act 1925:
the covenant has become obsolete
continued enforcement of the covenant is
obtrusive to a public/private use of land
of no practical benefit/contrary to the public interest
compensable by money
all those entitled to the benefit consent to the discharge
the discharge confers no injury on the person benefiting

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