Restrictive covenants 

A restrictive covenant is a promise about the use of land — not to build above a height, not to run a business, not to subdivide. Between the original parties it is simply a contract. The doctrinal interest lies in what happens afterwards: whether the promise binds a purchaser who never made it, and whether a later owner of the benefited land can enforce it. The answers come from equity, and they are narrower than students usually expect.

Why equity, and why only negative covenants

At common law the burden of a covenant does not run with freehold land. A purchaser who did not promise is not bound by the promise, however clearly it was expressed.

Equity intervened in Tulk v Moxhay (1848) 2 Ph 774.¹ A purchaser who takes land with notice of a restriction accepted by their predecessor cannot in conscience disregard it. The intervention is conscience-based, and that explains its limits: equity restrains a purchaser from doing something, but will not compel them to do something they never agreed to do. The burden of a positive covenant — to repair, to contribute, to maintain — therefore does not run.

The distinction is one of substance, not wording. A covenant "to keep the land as open space" is negative despite its positive phrasing; a covenant "not to allow the fence to fall into disrepair" is positive despite its negative phrasing. Ask whether compliance requires the owner to put a hand in their pocket.

Requirements for the burden to run

Four requirements must be satisfied:

1. The covenant must be negative in substance, as above.
2. It must benefit land retained by the covenantee. A covenant taken purely for personal or commercial advantage, unconnected to retained land, does not run.
3. The parties must have intended the burden to run with the servient land. Statute in most jurisdictions supplies a presumption to this effect unless a contrary intention appears.
4. The successor must have notice. Under general law this is actual, constructive or imputed notice. Under Torrens, the mechanism is the register.

The benefit: annexation, assignment, scheme

A successor to the benefited land must also establish a right to enforce, and there are three routes.

Annexation attaches the benefit to the land itself at the time the covenant is made, so that it passes automatically on transfer. It may be express, or implied from the covenant's terms, and statute in several jurisdictions assists by deeming annexation unless excluded.

Assignment transfers the benefit expressly with the land on each disposition. It requires an unbroken chain, which is where such claims usually fail.

A building scheme — a scheme of development where lots are sold subject to mutually enforceable restrictions under a common plan — allows each lot owner to enforce against every other, regardless of the order of sale. The requirements are demanding: a common vendor, a defined area, restrictions intended to be mutually enforceable, and purchasers who bought on that footing.

Restrictive covenants under Torrens

Covenants are not interests that can be registered in the ordinary sense; the statutes provide instead for them to be recorded or notified on the title. The effect of recording differs between jurisdictions, and this is the point at which general principle must give way to the particular Act.

Recording generally serves the notice function, so that a registered proprietor takes subject to a recorded covenant. It does not usually confer indefeasibility on the covenant itself: a covenant that is invalid does not become valid by being recorded. The practical consequence is that a recorded covenant must still satisfy the equitable requirements before it binds.

Modification and extinguishment

A covenant may be released expressly, or extinguished by unity of ownership of the benefited and burdened land. More often, relief is sought under the statutory power available in most jurisdictions to modify or wholly or partially discharge a covenant. The grounds typically include that the covenant is obsolete because of changes in the character of the neighbourhood, that it impedes reasonable user without securing practical benefit of substantial value, or that those entitled to the benefit have agreed or acquiesced.

Equity may also refuse enforcement on ordinary discretionary grounds — delay, acquiescence, or that the covenant has already been so widely breached in the area that enforcing it against one owner would be inequitable.

Enforcement and remedies

The primary remedy is an injunction, since the covenant is negative and equity enforces it specifically. Damages in lieu may be awarded where the breach is trivial, the injury capable of being estimated in money and adequately compensated by a small sum, and an injunction would be oppressive.

Delay matters. A covenantee who stands by while building proceeds may be confined to damages or barred altogether by laches and acquiescence, and interlocutory relief sought promptly is often decisive in practice because the completed building changes what the court is prepared to order.

A declaration as to whether a covenant binds particular land, or as to its meaning, is frequently the more useful application where the question is one of construction.

Construction

Covenants are construed according to ordinary contractual principles, in light of the scheme they were part of and the circumstances at the date of creation. Two recurring points:

• An ambiguity is not resolved against the covenantee as a matter of course, but a covenant restricting the free use of land will not be extended beyond what its words fairly bear.
• A covenant expressed in terms of a standard prevailing at the date of creation — building materials, architectural style, minimum floor area — is applied by reference to that standard, not to current practice.

Whether a covenant is negative in substance is also a question of construction. A covenant "to use the land only as a private dwelling" is negative despite its positive form, because compliance requires only abstention.

Applying this in a problem question

1. Characterise the covenant as negative or positive in substance, and if positive, say so plainly: the burden does not run and the analysis ends for successors.
2. Work through the four burden requirements in order, identifying which is contested.
3. Deal with the benefit separately — annexation, assignment or scheme — and do not assume the claimant can enforce merely because they own nearby land.
4. Under Torrens, check whether the covenant is recorded and what the applicable Act says recording achieves.
5. Consider the statutory modification power and equitable discretionary bars if the facts suggest changed neighbourhood character or long acquiescence.

Self-check

• Have I tested the covenant for negativity in substance rather than in wording?
• Have I established the claimant's right to the benefit, not just the defendant's burden?
• Have I checked what recording achieves under the particular Torrens statute?
• Have I considered whether changed circumstances make the covenant liable to modification?