70317 Chap.13 Freehold Covenants and Schemes of Development
Freehold Covenants and Schemes of Development
Promises about land
A freehold covenant is a promise in an instrument to do, or more often not to do, something on land, such as not building above one storey. Between the original parties it is a contract; the question for this topic is when it binds and benefits later owners.
Burden and benefit
At common law the burden does not run with freehold land, the effect of Austerberry.
Equity lets the burden of a restrictive covenant bind a successor with notice, following Tulk v Moxhay, but positive burdens still do not run.
The benefit can pass by annexation, assignment or a scheme of development under Elliston v Reacher.
Statute on Torrens land
Section 88 of the Conveyancing Act sets requirements for instruments creating restrictions, and s 88B lets developers create covenants across a subdivision. Section 89 allows modification, and planning instruments under s 3.16 of the planning Act can suspend covenants.
What this chapter covers
- 01
Restrictive and positive covenants
- 02
Why the burden does not run at law
- 03
Tulk v Moxhay and the equitable burden
- 04
Annexation, assignment and the benefit
- 05
Sections 88 and 88B of the Conveyancing Act
- 06
Schemes of development under Elliston v Reacher
- 07
Modification under s 89 and planning overrides
Worked example · free
Showing which side of a covenant passes to later owners
- 1Separate the two promises: the height limit is restrictive; maintaining the fence is positive.
- 1The burden of a restrictive covenant can bind a successor in equity (Tulk v Moxhay), here through a recorded s 88 instrument.
- 1The burden of a positive covenant does not run to a successor (Austerberry).
- 1The new owner of Lot 1 is bound by the height limit, enforceable by the owner of Lot 2, but not by the fence promise.
Key terms
- Positive Covenant
- A promise to do something on land, such as to repair or pay, whose burden does not run to later owners.
- Annexation
- Attaching the benefit of a covenant to identified land so that it passes to later owners of that land.
- Scheme Of Development
- A subdivision sold under common restrictions intended to benefit every lot, enforceable among later owners.
Freehold Covenants and Schemes of Development FAQ
Does a restrictive covenant bind a person who buys the land later?
It can. Equity allows the burden of a restrictive covenant to bind a successor who takes with notice, following Tulk v Moxhay, and for Torrens land an instrument meeting s 88 of the Conveyancing Act and recorded on the folio gives that effect. The covenant must also benefit land held by the person enforcing it.
What does Elliston v Reacher require for a scheme of development?
A common vendor, lots laid out under a scheme, restrictions intended to benefit all the lots, and purchasers who bought on that footing. When those elements are proved, owners within the scheme can enforce the restrictions against each other even without a modern instrument, as Hosking v Haas illustrates.
How are freehold covenants different from leasehold covenants?
Leasehold covenants are promises in a lease and run between landlord and tenant through privity of estate. Freehold covenants affect freehold land and run, if at all, under the separate rules of equity and statute discussed in this chapter. The Week 11 overview warns that mixing the two sets of rules produces wrong exam answers.
Can a restrictive covenant be removed or changed?
Yes, in some cases. Section 89 of the Conveyancing Act allows the court to modify or extinguish a restriction, for example where it has become obsolete, and environmental planning instruments made under s 3.16 of the planning Act can suspend covenants that stand in the way of permitted development. Cumerlong and Pieper v Edwards are the readings.
Exam move
Use a five-step sequence for every covenant problem: is it restrictive, was it created in a valid instrument, does the burden bind the defendant's land, does the benefit attach to the claimant's land, and are there defences under s 89 or a planning instrument.
Read Tulk v Moxhay, Elliston v Reacher and Hosking v Haas, and practise one subdivision problem under a s 88B instrument and one older estate problem under a scheme of development. Try the task the module suggests: walk through a new housing development and list the features a covenant might control, from letterboxes to roof colours.
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