UNIVERSITY OF PETROLEUM & ENERGY STUDIES

COLLEGE OF LEGAL STUDIES

B. A. L.L. B (HONS.)- A
SEMESTER-V
ACADEMIC YEAR: 2015-16
DECEMBER

SESSION: AUG-

PROJECT
Covenants Running with the Land
FOR
Property Law
Under the Supervision of: Mrs. Shikha Dimri
NAME:
SAP NO:
500028416
ROLL NO:
R450213040

DIVYANSHU GUPTA

INDEX

INTRODUCTION.3.
REAL COVENANTS6.
RESTRICTIVE COVENANTS/
COVENANTS RUNNING WITH THE LAND..9.
CASE STUDY..22.
CONCLUSION....23.

INTRODUCTION
Covenant
An agreement, contract, or written promise between two individuals that frequently constitute
s a pledge to do or refrain from doing something.
The individual making the promise or agreement is known as the covenantor, and the individ
ual to whom such promise is made is called thecovenantee.
Covenants are really a type of contractual arrangement that, if validly reached, is enforceable
by a court. They can be phrased so as toprohibit certain actions and in such cases are sometim
es called negative covenants.
There are two major categories of covenants in the law governing real property transactions:
covenants running with the land and covenantsfor title.1

Covenants Running with the Land

A covenant is said to run with the land in the event that the covenant is annexed to the estate
and cannot be separated from the land or theland transferred without it. Such a covenant exist
s if the original owner as well as each successive owner of the property is either subject toits
burden or entitled to its benefit. A covenant running with the land is said to touch and concer
n the property. For example, an individualmight own property subject to the restriction that it
is only to be used for church purposes. When selling the land, the person can only do soupon
an agreement by the buyer that he or she, too, will only use the land for church purposes. The
land is thereby burdened or encumbered by a Restrictive
Covenant, since the covenant specifically limits the use to which the land can be put. In addit
ion, the covenant runs withthe land because it remains attached to it despite subsequent chang
es in its ownership. This type of covenant is also called a covenantappurtenant.
1 Legaldictionary.com

Certain EASEMENTS also run with the land. An easement, for example, that permits one lando
wner to walk across a particular portion of theproperty of an adjoining landowner in order to
gain access to the street would run with the land. Subsequent owners of both plots would take
the land subject to such easement.
A covenant in gross is unlike a covenant running with the land in that it is personal, binding o
nly the particular owner and not the land itself. Asubsequent owner is not required to keep the
promise as one would with a covenant appurtenant.

Covenants for Title

When an individual obtains title to, or possession and ownership of, real property, six covena
nts are ordinarily afforded to him or her. Theyare (1) covenant for seisin; (2) covenant of the r
ight to convey; (3) covenant against encumbrances; (4) covenant for Quiet
Enjoyment; (5)covenant of general Warranty; and (6) covenant for further assurances.
A deed to real property that provides for usual covenants generally includes the first five of th
ese covenants. When a deed provides for fullcovenants, it is regarded as giving such protectio
n as is extended pursuant to all six covenants.
Covenants for seisin and of the right to convey are ordinarily regarded as being the same thin
g. Essentially, they make a guarantee to thegrantee that the grantor is actually the owner of th
e estate that he or she is transferring.
The covenant against encumbrances promises to the grantee that the property being conveyed
is not subject to any outstanding rights orinterests by other parties, such as mortgages, liens, e
asements, profits, or restrictions on its use that would diminish its value. Theexistence of Zon
ing restrictions do not constitute breach of this covenant; however, the existence of a violatio
n of some type of zoning orbuilding restriction might be regarded as a breach thereof.
The covenants of quiet enjoyment and general warranty both have the legal effect of protectin
g the grantee against all unlawful claims ofothers, including the grantor and third parties, who
might attempt to effect an actual or constructive eviction of the grantee.
The sixth covenant, which is the covenant for further assurances, is not widely used in the Un
ited States. It is an agreement by the grantor toperform any further necessary acts within his o
r her ability to perfect the grantee's title.

The first three covenants of title ordinarily do not run with the land, since they become perso
nal choses in actionrights to initiate a lawsuitif breached upon delivery of the deed. The
others are covenants appurtenant or run with the land and are enforceable by all grantees of th
eland.
In order to recover on the basis of a breach of a covenant of title, financial loss must actually
be sustained by the covenantee, since suchcovenants are contracts of indemnity. In most juris
dictions, the maximum amount of damages recoverable for such a breach is the purchaseprice
of the land plus interest.

Purposes
Land use planning is often effected through the use of covenants. Covenants facilitate the cre
ation of particular types of neighborhoods aspart of a neighborhood plan. A housing develope
r might, for example, buy up vacant land to divide into building lots. A low price is paid for t
heundeveloped land, which the developer subsequently sells burdened with a number of restri
ctive covenants. The developer might stipulate inthe contract of sale that the owner must retai
n the original size of a lot. Developers can also make owners agree that houses to beconstruct
ed upon the lots must be larger than a certain size and include other specifications to ensure t
hat such property will more than likelysell for premium prices because of the desirability of t
he neighborhood. Courts enforce such covenants provided they benefit and burden allthe prop
erty owners in a neighborhood equally.
Covenants will not, however, be enforced if they are intended to accomplish an illegal purpos
e. The Supreme Court ruled in Shelley v.Kraemer, 334 U.S. 1, 68 S. Ct. 836, 92 L. Ed. 1161 (
1948), that no court or state officials have the power under law to take any action towardthe e
nforcement of a racial covenant. In this case, a group of neighbors were bringing suit to prohi
bit a property owner from selling his hometo blacks, based on the argument that the owner ha
d purchased the home subject to the restrictive covenant not to sell to blacks. Thecovenant wa
s found to be unenforceable based on equal housing laws. To enforce it would constitute a Ci
vil Rights violation.

REAL COVENANTS
What Are Real Covenants?
Real Covenants are promises that concern the use of land. They can either be an affirmative
promise to do something with the land (e.g. build a front gate) or a negative promise to not do
something (e.g. not use the land for public events). Real Covenants consist of two elements:
the burden and the benefit.

What Is the Burden of a Real Covenant?

The burden of a real covenant describes the promissor's duty to perform the promise. For
example, suppose A owns a lake near B's house. If A promises B not to use the lake for
commercial purposes (e.g. sell lake usage to fishermen), A now has a duty to honor his
promise to B. In this case, the "burden" is A's inability to use his lake for commercial
purposes.

What Is the Benefit of a Real Covenant?

The benefit of a real covenant describes the promisee's right to enforce the promise. Using
the same example above, B has the right to enforce A's promise. The "benefit" here is B's
power to limit what A does with his land, which in this case is preventing commercial use of
the lake.

What Happens to a Real Covenant When the Land is

Sold to Someone Else?
Even if the land changes ownership, it's still possible for a real covenant to remain. A key
feature of real covenants is their ability to run with the land. In other words, whoever owns
the land can be forced to honor a previously made real covenant. But in order for either the
burden or the benefit of a real covenant to run, a few requirements must be met.

What Is Needed for the Burden of a Real Covenant to

Run?
There are five requirements that must be met before the burden of a real covenant can run:

Form: The real covenant must be in some form of writing (e.g. contract, clause, or a separate
document)
Intent: The original promissor and promisee must have intended for the burden/benefit to run
or pass down to future owners of the land. This is usually indicated by whether or not the
promise is directed towards a particular person or is generally applicable.
For example, suppose X makes a promise to Y stating, "I promise Y to build a picket fence
around my farm." Here, the promise is directed solely to Y. In contrast, suppose X says, "I
promise to build a picket fence around my farm." Here, the promise is not directed at a
particular person, and therefore it's possible that the promise was meant to run.
Touch and Concern: The real covenant must relate to direct use or enjoyment of the land.
Horizontal Privity: This refers to a special relationship that exists between the original
promisor and the promisee, which can vary from state to state.
Vertical Privity: The person being burdened by the promise must own the EXACT same
piece of land as the promisor under the original real covenant.

What Is Needed for the Benefit of a Real Covenant to

Run?
In order for the benefit of a real covenant to run, four requirements are needed. The first
three are the same form, intent, and touch and concern requirements necessary for the
burden of a real covenant to run. The last requirement, verticality, only requires that the
person enforcing the benefit own some piece of the land owned by the promisee under the
original real covenant.2

2 http://www.legalmatch.com/law-library/article/property-law-real-covenants.html

Section 40 in The Transfer of Property Act, 1882

Burden of obligation imposing restriction on use of land.Where, for the more beneficial
enjoyment of his own immoveable property, a third person has, independently of any interest
in the immoveable property of another or of any easement thereon, a right to restrain the
enjoyment 1[in a particular manner of the latter property], or Or of obligation annexed to
ownership but not amounting to interest or easement.Where a third person is entitled to the
benefit of an obligation arising out of contract and annexed to the ownership of immoveable
property, but not amounting to an interest therein or easement thereon, such right or
obligation may be enforced against a transferee with notice thereof or a gratuitous transferee
of the property affected thereby, but not against a transferee for consideration and without
notice of the right or obligation, not against such property in his hands. Illustration A
contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C,
who has notice of the contract. B may enforce the contract against C to the same extent as
against A.

Or of obligation annexed to ownership but not amounting to interest or easement.

Where a third person is entitled to the benefit of an obligation arising out of contract
and annexed to the ownership of immovable property, but not amounting to an interest
therein or easement thereon, such right or obligation may be enforced against a
transferee with notice thereof or a gratuitous transferee of the property affected
thereby, but not against a transferee for consideration and without notice of the right or
obligation, not against such property in his hands.
Illustration A contracts to sell Sultanpur to B. While the contract is still in force he sells
Sultanpur to C, who has notice of the contract. B may enforce the contract against C to
the same extent as against A.
1. Restrictive Covenants (Section 40)
2. Covenants Running with the Land

3. Contractual Obligations Annexed to Ownership

RESTRICTIVE COVENANTS/
COVENANTS RUNNING WITH THE
LAND
A covenant affecting land is restrictive if it restricts the doing of something to, on, over or
under land or in relation to an estate or interest in land3
Normally, a restrictive covenant is contained in a deed conveying land, although there is
nothing to prevent a restrictive covenant from being created by a separate document. At first
glance, one might ask why this subject is being included in a course on "Practical Property",
since the above description of a restrictive covenant appears to rest on contractual rather than
property principles.
If A conveys land to B, and in the deed B, in consideration of the conveyance, agrees not to
use the land for purposes other than residential purposes, does not the usual requirement of
privity of contract apply, and if this requirement is not met, can it not be said that A only has a
remedy against B if B breaches this covenant, unless there is a voluntary assumption of
liability for its breach by B's successors in title to the land?
This was the case until 1848 when Tulk v. Moxha (1848)4, was decided. Until that time, it
was possible for A, who had the benefit of the covenant, to assign the benefit of the covenant
to the purchaser when he sold the property, but, in the absence of a voluntary assumption of
liability on the covenant by subsequent purchasers of the land the benefit of the covenant
would be practically useless, the covenant being designed, as it was, to enhance the value of
the property retained by A by restricting the use of the neighbouring property originally
conveyed to B.

3 Elphinstone -Covenants Affecting Land, page 5.

4 41 E.R.1143

"A restrictive covenant is a contract between two neighbouring land owners by which the
covenantee, anxious to maintain the saleable value of his property, acquires the right to
restrain the covenantor from putting his land to certain specified uses." 5
At common law, therefore, the purchaser of a property, the use of which was restricted by
covenant, could, with full knowledge of the covenant, purchase the property and ignore the
restriction, and nevertheless be free from all liability for its breach, and, by the same token,
the person who made the covenant could sell the property in question the next day at a profit
and free from the restriction. As a result, the courts of equity intervened in Tulk v. Moxhay 6
In that case, the covenant under consideration was a covenant by the purchaser of property
which included Leicester Square to maintain Leicester Square as a garden. A successor in title
to the purchaser cleared the entire area of vegetation and the original covenantee brought an
action against him to restrain this breach of the covenant. The court pointed out how
inequitable the result would be if the covenantee was left without a remedy when it said,7:
" ....nothing could be more inequitable than that the original purchaser should be able to sell
the property the next day for a greater price in consideration of the assignee being allowed to
escape from the liability which he had himself undertaken." The Court, in this case, treated
the covenant not only as a contract but also as an interest in real property appurtenant to the
land owned by the covenantee, or the person having the benefit of the covenant originally,
which burdens or encumbers the title to the land owned by the person who originally gave the
undertaking under the covenant. Restrictive covenants which benefit land and burden other
land, therefore, are akin to easements, since there must be both a dominant tenement, that is,
the land to be benefited, and a servient tenement, that is, the land to be burdened.
However, in order for a restrictive covenant to have this effect, certain conditions must be
met.
These conditions are correctly described as follows:8

5 D. J. Donahue, Conveyancer's Guide to Real Estate Practice in Ontario, at pages 72-73,

6 supra.
7 Tulk v. Moxhay, page 1144
8 page 52 of Elphinstone - Covenants Affecting Land

(a) The intention of the parties that the benefit of the covenant should be capable of passing
with the land to be benefited, must appear from the instrument creating the covenant;
(b) the covenant must have the object of protecting land which, at the date of the covenant
belongs to, and after the date of the covenant, is retained by, the covenantee;
(c) at the dates of the covenant and of the conveyance or assignment and at the date of the
breach complained of, the covenant must be capable of protecting the land intended to be
protected; and
(d) the land intended to be protected must be described by the instrument creating the
covenant so as to be ascertainable with reasonable certainty. The covenant must also be
negative in substance: 9
Let us examine each one of these characteristics more closely. The first characteristic, that is,
the characteristic that the parties intended that the benefit and burden of the covenant should
be capable of passing with the title must appear either expressly or by implication in the
document creating the covenant. In order for a covenant to have the second characteristic,
that is, have the object of protecting land, it must "touch or concern" the land.
"Adopting the definition of Bailey, J., in Congleton Corporation v. Pattison10, the covenant
must either affect the land as regards mode of occupation, or it must be such as per se, and
not merely from collateral circumstances, affects the value of the land". Accordingly, a
restrictive covenant burdening one property must be capable of benefiting another property.
For example, a covenant that property shall be used only for residential purposes clearly
benefits, and enhances the value of the property which is intended to be benefited,
notwithstanding who the owner of that property may be. 11
It is because of this principle that a covenant which is expressed to benefit lot A by restricting
the use of lot B, which may be many miles away, is probably not enforceable. Thus, if A
owns property in the south end of the City of Halifax and owns another property in the north
end of the City, sells the property in the north end, and purports to include a covenant in the
deed for the benefit of the south end property to the effect that the north end property will be
9 Zetland v. Driver [1939] Ch. 1.
10 (1808), 10 East 130, 135
11 Farwell, J., in Rogers v. Hosegood [1900] 2 Ch. 388, at page 395

used for residential purposes only, that covenant is clearly incapable of actually benefiting the
south end property, notwithstanding what the parties intended, and is therefore only
enforceable between the original parties and not between the successors in title to the south
end property and the north end property. The next characteristic of a restrictive convenant
which runs with land, it will be recalled, is that the land intended to be protected or benefited
must be described by the instrument creating the covenant so as to be ascertainable with
reasonable certainty, although a full legal description is probably not necessary if the property
is otherwise identifiable with reasonable certainty: In Re Union of London and Smith's
Bank Limited12
Finally, a covenant which runs with land must be negative in substance. This is so because
the remedy for a breach is injunctive in nature and the courts are reluctant to grant injunctions
which require the doing of positive acts which require continuous supervision by the courts.
However, a covenant may be positive in form but negative in substance. For example, in Tulk
v. Moxhay13, a covenant which was positive in form, providing, as it did, that the covenantor
would maintain Leicester Square as a garden, was held to be negative in substance as actually
being a covenant not to use the property for any purpose other than as a garden. In addition to
meeting these general conditions, when drafting restrictive covenants, one should also keep in
mind the following considerations:
(a) A restrictive covenant which forbids the sale, mortgage or lease of land is void and
unenforceable under the general principle that any restriction on alienation is void if it is
designed to prevent the exercise of a power, such as the power of alienation, which is
inherent in the ownership of a legal estate in fee simple: 14
(b) If a covenant is intended to protect only a part of the land described, and is only expressed
as benefiting all the land described, but is actually capable of benefiting only part of that land,
it does not run with all the land notwithstanding that it may be capable of benefiting a part of
it. For example, in the case In Re Ballard's Conveyance15 where the covenant was with the
owner of the Childwickbury Estate, which consisted of 1700 acres, there were no words such
12 [1933] Ch. 611, 631.
13 supra
14 Shaw v. Ford (1877) 7 Ch. D. 669 at page 674.
15 [1937] Ch. 473

as "all or any of the lands" to indicate that the benefit of the covenant was to pass by a
conveyance of a part of the land. Accordingly, Clauson, J. held that while the covenant might
touch or concern a small portion of the Childwickbury Estate, it did not touch or concern the
remainder of it and that the covenant could not be severed and treated as annexed to that part
of the land as was actually touched by or concerned by the covenant. He did, however, say
this16: "In Rogers v. Hosegood the benefit of the covenant was annexed to all or any of certain
lands adjoining or near to the covenantor's land and no such difficulty arose as faces me here;
and there are many other resported cases in which, for similar reasons, no such difficulty
arose." What are the practical considerations which result from these principles? First of all,
let us place ourselves in the position of a solicitor for a client who is planning to sell part of
his property and to protect the property being retained by him, for all time, by creating a
restrictive covenant which will burden the land which he intends to sell and benefit the land
which he intends to retain. He must determine whether' the covenant is
(a) capable of benefiting the land to be retained, regardless of who the owner may be, and
(b) contrary to the policy of the law, such as a restriction on alienation. Once the solicitor has
satisfied himself on these points, he should ensure that the deed contains a covenant which is
negative, that the deed clearly expresses an intention that the burden and benefit run with the
title to both lots A and B, and that the problem which arose in the case In Re Ballard's
Conveyance17 is avoided by using the words suggested by the Court in that case..
Accordingly, the deed should contain a covenant which could be in the following form: To
the intent that the benefit of the following covenant runs with and to the benefit of all or any
of the lands described in Schedule A and the owner, owners, occupier or occupiers from time
to time of such lands, and that the burden of that covenant runs with and burdens all or any of
the lands described in Schedule B, the grantee, his heirs, executors, administrators, successors
and assigns covenant with the grantor, his heirs, executors, administrators, successors and
assigns as follows: (Here insert negative covenant)
It will be remembered that the grantee is creating an equitable interest in the lands being sold
which is appurtenant to the title to the lands being retained. Accordingly, the client who
wishes to protect the property he is retaining is concerned not only as to whether or not the
covenant is enforceable against the title to the land he is selling but also that the interest he is
16 Rogers v. Hosegood ,at page 481
17 supra

receiving, as owner of the retained land, is a first charge on the property being sold so that the
benefit of the covenant cannot be destroyed by some prior charge.
What then, is the effect of a mortgage on a property which is made before the creation of a
restrictive covenant affecting the same property? If the property to be burdened by the
restrictive covenant is, at the time the restrictive covenant is created, subject to a prior
mortgage, or a judgment, (under the Registry Act a judgment has the same effect as a
mortgage) it is my view that if the property subject to the restrictive covenant is sold at a
foreclosure sale respecting the mortgage or at an execution sale respecting the judgment, the
purchaser at the sale takes the property free of the restrictive covenant, since the purchaser at
the sale gets all the interest which the owner of the burdened property had at the time the
mortgage or judgment came into existence. In this case, the property was not burdened by the
restrictive covenant at the time the mortgage or judgment came into existence. As a result,
when acting for a client who wishes to have his property protected by the device of a
restrictive covenant on an adjoining or neighbouring property, it is essential that a full title
search of the adjoining or neighbouring property be carried out and that if any prior
encumbrances are found, those encumbrances be released or subordinated to the rights of the
person entitled to enforce the restrictive covenant. From the point of view of the person who
is, for a consideration, burdening his property with a restrictive covenant, it must be
remembered that the covenant is, as far as he is concerned, not only a negative easement on
his title, but also a contractual oblgation. Accordingly, it is advisable, from his point of view,
to include in the restrictive covenant a provision that he is liable in damages in an action in
contract only for a breach of the restrictive covenant which occurs while he is the owner and
occupier of the property. So far, I have discussed the first major intervention by the courts of
equity in a field which, were it not for this intervention, would only be contractual in nature.
The next major extension to the law was made in Elliston v. Reacher18 [This further extension
of the equitable principle laid down in Tulk v. Moxhay became necessary as a result of
developers selling off lots in accordance with plans of subdivision without expressly
burdening the unsold lots with the same restrictive covenants contained in the deeds to the
lots. In such cases, an extension of the doctrine in Tulk v. Moxhay19 was necessary in order to
have the burden of restrictive covenants imposed on lots as they are sold burden the unsold
18 1908] 2 Ch. D. 374.
19 supra

lots, so that the owner of each lot in a subdivision may enforce the restrictions which burden
his lot against other lots in the subdivision. In order to overcome this problem the courts,
beginning in Elliston v. Reacher20, have, under certain circumstances, held that on each sale,
the purchaser not only covenants with the vendor to observe the restrictions imposed on his
lot but that the vendor also covenants impliedly with the first purchaser to observe the same
restrictions with respect to each unsold lot. As a result, each unsold lot becomes burdened in
equity with the implied covenant and the lot sold to the first purchaser is not only burdened
by the covenant but benefited with its protection as against the title to the other lots. This
device is known as a "building scheme", but before a building scheme will be implied the
following conditions, as outlined in the judgment of Parker, J. in Elliston v. Reacher21 , must
be met:
(a) the person claiming the benefit of the restrictions and the person bound by the restrictions
must claim under a common vendor;
(b) before selling either the land protected by the restrictions or the land bound by the
restrictions, the common vendor must have laid out a defined area of land belonging to him
(including the land protected and the land bound by the covenant) for sale in lots, subject to
restrictions intended to be imposed on all the lots which, though they may vary in detail as to
particular lots, are consistent only with the general scheme of development;
(c) the restrictions must have been intended by the common vendor to be and have been for
the protection of all the lots intended to be sold, whether or not they were also intended to be
and were for the benefit of other land retained by the vendor but not comprised in the
scheme;
(d) the land protected and the land bound by the restrictions must have been purchased from
the common vendor upon the footing that the restrictions were to enure to the benefit of the
other lots included in the scheme, whether or not they were also to enure to the benefit of
other land retained by the vendor but not included in the scheme;
(e) the first purchaser must have had notice of the relevant facts; and

20 supra
21 supra

(f) the scheme must have been formulated before the first sale. It is apparent that whether a
series of conveyances with restrictions amounts to a building scheme is a question of fact in
each case, and that it is not essential, as it is in cases which do not amount to a building
scheme, to describe the land to be benefited. A building scheme, properly created, amounts to
a general local law for a subdivision which each owner can enforce against the other by
injunction. In a building scheme, the technical drafting is not as important as is the intent of
the parties to be gathered from all the circumstances22.
However, in view of the fact that it is difficult to predict whether or not a court will imply an
intent to create a building scheme, I would, notwithstanding this rule, recommend that the
formalities, such as specifically mentioning the land to be benefited, be Eollowed when
drafting restrictive covenants in a subdivision. I now return to certain additional steps which
should be taken when imposing restrictive covenants either by the device of a building
scheme or pursuant to the doctrine in Tulk v. Moxhay. Is it necessary that the purchaser sign
the deed creating the restrictions? In Gilpinville Ltd. v. Dumaresq23 Harris, C.J. held that a
purchaser who accepts title under a deed containing a restrictive covenant is bound thereby
although he did not sign the deed, and an agreement containing a similar covenant signed by
him as a preliminary to the giving of the more formal deed, is admissible as evidence of his
intention to be bound. In the result, if it can be shown that the first purchaser accepted the
deed containing the restrictive covenant but did not sign it, he is bound by the covenant, and
the covenant runs with the land. The signing is only an evidentiary matter and the lack of a
signature is not fatal if the court concludes, on all the evidence, that the purchaser did, in fact,
accept the restrictive covenant. However, when creating a restrictive covenant, it is advisable
to have conclusive evidence that the purchaser accepted the restrictive covenant and therefore
it is the better practice to have each first purchaser from the subdivider execute the deed
containing the restrictions.
It is also important, when preparing or perusing an agreement of sale, to make sure that the
agreement clearly provides that the deed to be given at the closing be subject to the restrictive
covenants and that the covenants be specifically set out in the agreement. It is true that the
standard form of agreement of purchase and sale provides that the title to be given is subject
to "easements and restrictions which do not materially affect the enjoyment of the property".
22 Re Lakhani and Shapiro (1981), 16 R.P.R. 305 at pages 313 and 314 (Ont. H.Ct.)
23 [1927] 1 D.L.R. 730 (N.S.S.C.T.D.)

However, since it may be highly arguable whether the particular restrictive covenants which a
vendor proposes to put in a deed do, in fact, materially affect the enjoyment of the property to
be sold, I would recommend that the agreement of purchase and sale specifically set out the
restrictive covenants which the subdivider intends to put in the deed. It is also important to
remember that even if the agreement of sale contains a provision that the deed be subject to
restrictive covenants, if the deed given pursuant to the agreement, at the closing, does not
contain the restrictive covenants, then the deed prevails and the restrictive covenants
mentioned in the agreement cannot be enforced: Millborn v. Lyons24. Since a restrictive
covenant is an equitable charge on land it can, if not recorded, be defeated by a subsequent
registered instrument taken by a purchaser for value in good faith without notice of the
restrictive covenant.
Section 25 of the Registry Act provides as follows: "No equitable lien, charge or interest
affecting land shall be valid as against a registered instrument executed by the same person,
his heirs or assigns."25 Accordingly, whether the restrictive covenants are contained in a deed
or in a separate instrument, the document creating them should be registered in the registry of
deeds in order to preserve them against subsequent purchasers for value and without notice of
them. I now turn to the position of a solicitor for the purchaser of real property subject to
restrictive covenants. If, in searching the title, the solicitor comes across covenants in a deed
in the chain of title, and the agreement of purchase and sale does not provide that the
conveyance is to be made subject to the restrictions, and the purchaser does not wish to take
the property subject to the restrictions, then, because restrictive covenants create an equitable
charge, there is an objection to title, and the removal of the restrictions must be requisitioned
within the time, as provided in the agreement, that other requisitions to title must be made. I
At the outset, I should point out that it is not true that merely because a restrictive covenant is
framed as being in effect for all time, it offends the rule against perpetuities and is therefore
not enforceable. This is not i the law and, indeed, unless a restrictive covenant becomes
unenforceable in other circumstances which I will mention shortly, it remains enforceable for
all time, no matter how long ago it was created: MacKenzie v. Childers26 If a solicitor for a
proposed purchaser finds, in his search, covenants which appear to him to be restrictive
24 [1914] 2 Ch. 231
25 Section 25 of the Registry Act
26 (1889), 43 Ch. D. 265 at page 279.

covenants which may run with the land, and has instructions to requisition a release of those
covenants, it is important that the requisition be not only made on time, but that it be framed
properly. The requisition must be for a release from the present owner of, and anyone else
who has an interest in each property benefited of the covenant, together with a release from
each mortgagee and each encumbrancer of the property benefited by the covenant, including
a tenant, since the benefit of a restrictive covenant, when it is expressed to benefit the owner
of the property and his "assigns", extendsn to a tenant of the owner.27 It is immediately
apparent that in the case of a large subdivision, where most or all of the lots have been sold,
such a requisition, for all practical purposes, could be fatal to a sale.
However, if, in each deed, the subdivider has reserved to himself the right to vary or give
consent to a breach of a building restriction, then a release from the owners of the lots is not
necessary and the scheme may be varied by the original subdivider only, since each purchaser
bought on this footing.28 The form of the release is important. It will be remembered that a
restrictive covenant not only imposes a contractual obligation but also creates an equitable
right in property and therefore the release should not only release the purchaser from any
liability in contract, but, in addition, should release the property right in the lot. As a result,
the release should contain, in addition to a release of personal liability in contract, the
following clause: "The releasor also releases to the releasee any right, title or interest the
releasor has in the (describe the lands being sold) by virtue of a restrictive covenant contained
in a deed dated the day of made between as grantor and as grantee, registered in the registry
of deeds." When a purchaser requisitions a release of a restrictive covenant, the vendor often
takes the position that the covenant is contractual in nature and does not "run with the land"
because it does not meet all the tests which must be met before a covenant runs with land. It
is apparent that more often than not there is no clear answer to this question, and, as a result,
a court, in an application made under the Vendors and Purchasers Act, may be asked to
determine whether a covenant does run with land and therefore whether or not an objection to
title which is made respecting a covenant is valid. An application under the Vendors and
Purchasers Act is certainly a speedy and fairly cheap method of having this question
determined in a summary manner by a chambers judge on an agreed statement of facts.
However, the application may only be between the vendor and the purchaser, and the
27 Taite v. Gosling (1879), 11 Ch.273.
28 Whitehouse v. Hugh [1906] 1 Ch. D. 253.

question arises as to whether or not an order made in such an application is binding on those
persons entitled to enforce the covenant but who are not parties to the application. It is not
safe to assume that because a restrictive covenant was made more than twenty years ago it is
no longer effective because of the Limitation of Actions Act. It must be remembered that the
time for bringing an action with respect to a restrictive covenant begins to run not from the
time when the restrictive covenant was created but from the time of its breach: Turner v.
Moon29. Although a restrictive covenant is, subject to this limitation period, enforceable at
any time, there are other circumstances in which a restrictive covenant becomes
unenforceable. It must be remembered that the enforcement of an equitable charge is by way
of injunction and that an equitable remedy cannot be pursued if there is any delay or laches in
bringing the action.
In addition, a person entitled to the benefit of a restrictive covenant affecting land may be
estopped from enforcing the covenant if he
(a) knows of his own rights and of another person's intention to commit a breach of the
covenant;
(b) by his acts or omissions causes or permits the other person to believe that the covenant
does not exist, or is no longer enforceable against that other person or that he, the person
entitled to enforce the covenant, has waived his right; and
(c) by his acts or omissions causes or permits the other person to commit a breach of the
covenant and incur expenditure in reliance upon such belief30.
Also, a restrictive convenant becomes unenforceable if there is a general change in the
character of the neighbourhood. For example if a subdivision, originally designed to be
residential, and subject to restrictive covenants which require that lots shall be used for
residential purposes only, becomes, nevertheless, commercial in nature, then the restrictive
covenants are no longer enforceable.31 Finally, a right to an injunction against an owner will
be lost if there has been acquiescence in previous breaches by other owners. For example in

29 [1901) 2 Ch. 825

30 Elphinstone - Covenants Affecting Land, page 107
31 Elphinstone - Covenants Affecting land, p. 110.

Turney v. Lubin32 it was held that the failure to initiate proceedings with respect to previous
breaches by other owners subject to the covenant amounted to an implied approval of the
breach complained of in that case.
If property is expropriated, does the expropriation extinguish any burden on the title to the
property created by a restrictive covenant entered into before the expropriation? This question
is answered in Megarry and Wade - The Law of Real Property33 as follows: "Where land
which is subject to a restrictive covenant is acquired compulsorily by a public authority under
statutory powers, no action lies for breach of the covenant if what is done on the land is
validly done in the exercise of statutory powers. The authority of Parliament then overrides
the contractual restriction, and the covenantee's only remedy is to claim compensation for the
injurious affection of his own land which was previously benefitted by the covenant. But this
does not extinguish the covenant, which continues to bind the acquired land as regards any
use not authorized by statute. Thus where the Air Ministry compulsorily purchased
agricultural land for use as an aerodrome and later let it to a firm for use for commercial
flying, an injunction was granted to present the firm from so using the land in breach of a
covenant restricting it to agricultural use; but an injunction to prevent them from using it for
Air Ministry work was refused." In closing, I will briefly discuss the nature of the remedies
which may be sought in the event a restrictive covenant is breached. If a restrictive covenant
is breached and the original covenantee or any other person entitled to the benefit of the
covenant brings the action against the original covenantor, the court, on proof of the breach,
will grant an injunction as of course without requiring proof of any injury or prospect of any
injury in the future. If, however, the action is against a successor in title of the original
covenantor and the plaintiff is thereby entitled to sue in equity only, an injunction will be
granted only where it is shown that continuance of the breach will cause injury to the plaintiff
in the future.34
Accordingly, it is my view that if there is a restrictive convenant against pruning trees, an
injunction probably would not be granted against a successor in title to the original purchaser,
unless the plaintiff showed, in some way, that the continuance of this activity would cause
him substantial injury in the future. It should be noted that the plaintiff's motive in bringing
32 (1980), 10 R.P.R. 89 (B.C.S.C.)
33 (4th Ed.) at page 775
34 Elphinstone Covenants Affecting Land, pp. 96, 97.

the action is irrelevant, once he has discharged this burden.35 Finally, it should be noted that a
person entitled to enforce a restrictive covenant cannot use a self-help remedy to stop a
continuing breach.36 Damages were awarded for using a steam roller to demolish a wall
erected in breach of a restrictive covenant. It should be noted that a restrictive covenant is
enforceable against a squatter.37

CASE STUDY
TULK V. MOHXAY
Citation. 41 ER 1143, Volume 41
Brief Fact Summary. The Plaintiff, Tulk (Plaintiff), had sold Leicester Square by deed
containing. The Defendant, Moxhay (Defendant), a subsequent purchaser sought to build
upon the land. Plaintiff brought a bill for injunction.
Synopsis of Rule of Law. Since a covenant is a contract between the vendor and the vendee,
it may be enforced against a subsequent purchaser who has notice of the contractual
obligation of his vendor, even though it does not run with the land.
Facts. The Plaintiff sold Leicester Square with the restriction that it be maintained in a
35 Collins v. Castle (1887), 36 Ch. D. 243, 254.
36 Urban Housing Company v. Oxford City Council [1940] Ch. 70
37 Megarry and Wade - Law of Real Property (4th Ed.) 759.

certain form as a public pleasure ground. The deed restriction was covenant for heirs and
assigns requiring that the land be maintained as a square garden. The Plaintiff continued to
own homes and live around the square after its sale. In 1808, the person who originally
purchased Leicester Square from the plaintiff had notice of the covenant contained in the
deed. Forty years later, the property was sold to the Defendant, Moxhay. Moxhal sought to
build upon the land on the square. Plaintiff brought a bill for injunction to stop any
construction.
Issue. Can a covenant restricting a property to a specific use be enforced against a subsequent
purchaser?
Held. Whether or not the covenant runs with the land, such an agreement could properly be
enforced in equity because the one who purchases the land from Tulk had notice of that
covenant. Defendant, Moxhal could not stand in a different situation from the owner from
whom he purchased the property.
Discussion. An equitable servitude is enforceable by injunction with no regard to privity, so
long as the promise is intended to run and the subsequent purchaser has actual or constructive
knowledge of the covenant.

CONCLUSION
Sec.40-* Deals with what / when "Covenants (agreements)" between two parties with regard
to property would bind the 'other' parties .
This Section should be read along with section 11 of the T.P Act. The general rule is that on a
transfer of property no condition restrictive of the enjoyment of the property should be
imposed on the transferee [Sec.11 Para ij. However an exception to this general rule had been
made in Sec.11 Para ii. The exception made by the second para of Sec.11 is a recognition of
the rule that the transfer may impose conditions restraining the enjoyment of land if such
restrictions are for the benefit of his adjoining land.
While Sec.11 relates to the enforcements of the restriction against the transferee (i.e in the
case of transfer) Sec.40 refers to the enforcement of the restriction against the purchaser from
the transferee. (i.e the case of subsequent transfer).

Sec.11 recognizes that both the 'Positive' and the 'Negative' Covenants may be enforceable as
between the actual parties to the transfer, that is the transferor and the transferee.
But according to Sec.40 an affirmative covenant cannot now be enforced against a purchaser
from a transferee [ i.e in case of second transfer]. Positive covenants compel the transferee to
do some positive acts like digging a well etc but cannot compel subsequent purchasers. Such
covenants do not run with the land.
Oln the case of Austerberry vs Old Ham Corporation, Austerberry conveyed a land to B with
a condition that he should make a road upon the land and keep it good for the benefit of the
public. The condition was for the benefit of adjoining land. The land transferred hands and
finally came into the hands of Old Ham Corporation. The Corporation refused to construct a
road on the land. Austerberry filed a suit for the enforcement of the condition. The Court held
that it was a positive convenant, and in no way benefit any adjoining land and so such
covenant cannot run with the land at all.
ii)In Halsall vs Brizell (1956) the Court was considering the case of a developed estate in
which the developers retained the ownership of roads and sewers. Under certain covenants,
the developers were obliged to permit purchasers of properties in the estate to use them, and
the purchasers were obliged to contribute towards the cost. The question arose as to whether
the successors of the original purchasers were bound to contribute to the cost of the roads and
sewers. The Court held that the successors could not be sued on the covenant for it was a
positive covenant, which did not run with the land, but that it is ancient law that a man cannot
take benefit under a deed without subscribing to the obligations there under. The court held
that the successors had no right to use the roads and sewers except under the deed, and that as
they desired to take its benefits, they were bound by the covenants contained in it.
It is only a negative covenant like not to build, not to dig well etc. runs with the land and bind
the subsequent transferees also. Sec.55(2), 66 and 108 of the T.P Act deal with these
covenants.
1.

Restrictive Covenants (Section 40)

According to this section, where a third person

(1) has for the more beneficial enjoyment of his own immovable property and independently
of
(a) any interest in the immovable property of another, or
(b) any easement thereon, a right to retain the enjoyment in a particular manner, or
(2) is entitled to the benefit of an obligation
(a) arising out of contract, and
(b) annexed to the ownership of immovable property, but not amounting to an interest in or
easement thereon,
(3) Such right or obligation may be enforced against
(a) a transferee with its notice,
(b) a gratuitous transferee of the property affected thereby,
(4) But not against a transfereefor consideration and without notice of the right or
obligation, nor against such property in his hands. Covenants are written agreements or
contracts with respect to a property. Where the covenants restrict the use or enjoyment of a
property, they are known as restrictive covenants. Therefore, the restrictive covenants are
conditions imposed by the transferor restraining the use or enjoyment of property by the
transferee. The general rule of law is that a personal contract, even if it is related to a
property, is binding only between the parties to the contract and their privies. It is not
enforceable against third persons. As noted earlier section 11 of the Act says that where on a
transfer of property an interest is created in the property absolutely in favour of any person
but the terms of the transfer directs that such interest shall be applied or enjoyed by him in a
particular manner, he shall be entitled to receive and dispose of such interest in such a manner
as if there was no such direction. But if such interest has been made in respect of one piece of
immovable property for the purpose of securing the beneficial enjoyment of another piece of
such property, such a direction shall be a valid direction. Where the transferee is required to
do some act it is known as affirmative covenant but where he is restrained from doing certain
things, it is known as negative covenant. Section 11 deals with covenants enforceable against

the transferee but not against the subsequent transferees. Section 40 deals with negative
covenants and their enforceability against subsequent transferees. This section says that if a
transferor imposes a negative covenant in a transfer of property then such covenant is binding
and enforceable against the assignee of the transferee provided the following conditions are
fulfilled:
(i) The covenant is for the more beneficial enjoyment of the transferor's own immovable
property,
(ii) The subsequent transfer is for value and the assignee has notice of the covenant, or
(iii) The subsequent transfer is without consideration. Restrictive covenants are annexed to
the land as if they are part of the land and alongwith the transfer of land they pass on to every
subsequent transferee. This section enacts the equitable rule that the burden of a covenant
runs with the land. Therefore, such covenants are enforceable against any person who has
interest in that land. Affirmative covenants are not annexed to the land and do not run with
the land.

COVENANTS RUNNING WITH THE LAND

This expression is borrowed from the English law of real property. A covenant running with
the land is a covenant annexed to the land. A covenant may run with the land at law or in
equity. A covenant runs with the land at law when the benefit of it passes to the assignee of
the covenantee or when the burden of it passes to the assignee of the covenantor, and in either
case, independently of notice. A covenant runs with the land in equity when the burden of it
can be enforced against the assignee of the covenantor.
Tulk v. Moxhayl. This section is based on the English law, laid down in the case of Tulk v.
Moxhay. In this case, T owned a land in London. This land had a garden surrounded by the
houses. T sold the garden to E with the covenant that E and his successors or assignees will
keep the garden intact as garden ornamental and shall not construct any building on it. T
retained the ownership of the houses Surrounding the garden with him. After sometime E
sold the garden to another person who sold it further to some other person and ultimately it

was purchased by M. M had the notice of the covenant but he attempted to develop building
in the garden. T enforcing the covenant sought an injunction to restrain M from constructing
buildings in the garden. The Court held that in equity all the subsequent transferees were
bound by the covenant and it restrained M from building houses in the garden. Lord
Cotenham L.C. observed that since M had notice of the covenant and T had legitimate
interest in preserving the garden, the covenant was enforceable at equity against M.
Therefore, the rule laid down was that in equity a restrictive covenant imposed for the benefit
of the land retained by the transferor was binding on purchaser with notice.

CONTRACTUAL OBLIGATION ANNEXED WITH OWNERSHIP

The first paragraph of this section deals with the restrictive covenants whereas the second
paragraph provides for contractual obligations annexed to ownership. Restrictive covenants
are enforceable only when the covenantor's ownership rights in the property are already
established. Second paragraph deals with personal rights arising out of contract, annexed to
ownership in the property deals with personal rights arising out of contract, annexed to
ownership in the property. According to the second paragraph, where a third person is entitled
to the benefit of an obligation arising out of contract and annexed to ownership of the
property then the obligation may be enforced against a transferee for value with notice. For
example, A contracts to sell Sultanpur to B. While the contract is still in force he sells
Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the
same extent as against A. A contract for sale of an immovable property, imposes an obligation
on the seller to sell the property to purchaser but it does not create any interest in his favour
in the property. Such contract create an equitable estate in his favour. Restrictive covenants
and contractual obligations annexed to ownership are enforceable when the transfers are for
value and the transferees have notice of the restrictive covenants on the property. They are
not binding against a transferee for consideration without notice of the right or obligation.

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