Freehold Positive Covenants: An Archaic Concept - Case Study Example

Freehold Positive Covenants: An Archaic Concept Positive Freehold Covenant The issue of the whether positive freehold covenants should be accompanied by land obligation or not is something that has elicited divided opinion from scholars and law practitioners1.Land obligations refers to the responsibilities and restraints that are associated with land when there is transfer of ownership2. Freehold land is said to be one that is permanently owned by an individual, a group or company3. The person who permanently owns the land or property has the freedom to develop the land or to sell it when he or she wishes to do so4. However, selling the land or property is subject to certain conditions. Freehold ownership is created under the feudal law and the feudal system of tenure.5This replaced the native Irish law that was referred to as the Brehon Law. The freehold was introduced into the system in Ireland the years after the Norma Conquest that had led to land being vested in the King and governed through tenure concepts6 Covenants have over the years been used in the transfer of ownership of land in Northern Ireland. 7A covenant basically refers to a promise that a party makes to the other party to do something or fulfills a given agreed obligation8. A covenant can relate to both freehold and leasehold. In freehold land it is common to find covenants in the transfer deeds when land or a property is being sold and sold. This has been done when the party who is selling the property has some interest in the land that they are selling9. The interest can be preserved on the property or land in terms of a negative or positive covenant. Negative freehold covenants tend to be restrictive in nature. Unlike the negative freehold covenant, the second type which is positive covenant is not restrictive in nature. Example of a positive freehold covenant is a situation where there is a promise to build a fence between two properties or a covenant that requires the person buying the property to contribute towards the maintenance of things like shared access way or even a driveway. In such as case, the seller of the property must show an intention of enforcing the covenant as in the case of Amsprop Trading Ltd v Harris Distribution Ltd10. A positive freehold covenant can easily be enforced in a court of law when the parties to the contract remain in their initial status at the time when the contract was being signed11. The original covenantee has the right to enforce a positive freehold covenant against the original covenator. This provision by the law is however complicated when the covenantee is no longer the owner of the land which the freehold covenants relates to. This is normally the case where the Covenanter no longer owns the burden of the particular land that the contract (deed/conveyance) relates to. In such a case enforcing the covenant is difficult. This was witnessed in the case of Cardiff Meats Limited v McGrath & Ors12wherein it was held that only benefits of a covenant such as property interest and granting lease when lease agreement becomes unconditional run with land and not burdens like repair and maintenance. Freehold covenants can undoubtedly be intangible and at other times confusing, especially in the current world13.This is due to the fact that the covenant laws were set up a long time back under the Prescription Act 1832. The freehold covenants were created when a covenantee creates and imposes a burden on land to a second party14. Positive freehold covenants usually run at law alone as opposed to equity. This therefore means that land does not run to the subsequent buyers of the land. This has resulted in several attempts to make it run in equity just like the negative or restrictive freehold contracts15 For one to fully understand the problem with positive freehold covenants, it is vital to look at the origin of these land covenants. These land covenants date back to the 19th century during the time of industrial growth. This rapid growth resulted in expansion of towns throughout the United Kingdom. The regulations that were put in place during this period are somehow obsolete today because of the difference that exists between property ownership and development then and how it is currently. These covenants were put in place during transfer of ownership of land, especially among the middle class so as to maintain the status of the areas where they lived. They therefore imposed a provision in title deeds quoting what was expected of the buyer in relation to the land and property16 It has been a long held rule that in positive freehold covenants,it is only the benefits and not the burdens runs with the subsequent ownership of the particular land and property. This principle was founded m the case Keppel v Bailey17. This case clearly opposed the principle to the circumvention that land burden must run in any positive freehold covenant. In this case the judge held that great confusion would result if the parties in the case are allowed to come up with modes of new land holdings that make them enjoy their land. It was further stated that further detriment would occur should the land burden was allowed to follow characters however remote they were. This view was further consolidated by Austerberry v Oldham Corp18In this case, it was ruled that at common law, the obligation to repair roads and keep a particular road in a good condition was limited to the original party in the contract. This therefore exempted the simple fee owner from being bound by the terms of the positive freehold covenant. This was also the case in the case of Rhone v Stephen in a covenant to maintain a roof. Since this case, there as been reluctance by the courts of law when it comes to reformations that would allow the burden run in positive contract. Tito v Waddell19 also provides another way that exempts subsequent owners from a covenant if the original buyer was to pay all the cost in the covenant The Tulk v Moxhay20 is also another case which touches on the positive freehold covenants and the passage of obligations to subsequent owners. In this ruling, it was held that in a negative contract, which was defined as a contract that binds a land user to a certain purpose, successors are bound with title whereas this is not the case in positive freehold covenants Attempts intended to abolish the Tulk v Mokhay21rule have been witnessed. In its place an Act that provided that positive freehold contracts entered by deed become binding was proposed. Attempts have also been started to apply the land burden, obligation to positive land lease covenants22.Most of these attempts have been made indirectly so as to make simple fee successors to be bound by the original terms of the freehold positive covenants. However, most of the attempts have been viewed to seem like creation of other positive covenants that will lead to convergence of negative and positive freehold contracts. The rule of Elliston v Reacher23and Tulk v Moxhay remain two of the major features that inhibit passage of burden to simple fee owners. There has also been the argument that the current system is valid as the refusal by the Irish courts to allow obligations to run into positive contracts is based on sound policy. Moreover, this act has been said to be doctronically coherent. Wiley (1997) agrees with the view of the court not to allow land titles to be weighed down with positive obligations that are enforceable by other land owners as property rights24. The rule has been argued to serve to balance the competing interest of freedom contracts and the freedom from transaction. It is very clear that the issues that surround the question of positive covenants is developing and will continue to raise more and more questions as time goes on. According to Wiley (1997), there are some circumnavigations and exception to the Tulk V Moxhay rule as was seen in the Rhone v Stephen. The exceptions are however been limited and have given subsequent owners of land through simple fee a way out of covenants that were agreed on by the original buyers and sellers of land. This has made the subsequent owners to be able to carry out any kind of activity on their land or property. The doctrine of mutual benefit and burden has been used to enforce the positive leasehold contract as shown in the case of Halsall v Brizel25l. Another way through which simple fee owners can be made to obey the terms of a positive leasehold covenant is through the Hall v Ewin IMP26whereby reversion of the lease may allow the landlord to enforce a COV against the sub lessee. Several scholars have suggested that there should be the reformation of freehold covenant and the idea of land obligations. These reformations are intended to create merger between the negative as well as the positive27 freehold covenants so as to lessen the stark difference in the law between these two covenants. Interesting and useful new laws have been introduced with the intention of permitting discharge as well as modification freehold covenants through court orders. This has resulted from the realization that the laws are obsolete. These laws are applicable to both negative and positive contracts. This modification and discharge of the freehold covenants by court order are meant to get rid of promises that constitute unreasonable interference with the use and enjoyment of land. Even though such practices were meant to check against interference with property, they have also provided a way through which simple fee owners escape from obligation that result form a covenant that had been put in place between the original buyer and seller. Read More