RECO3037 Chap.7 Land Covenants and the Deed of Mutual Covenant
Land Covenants and the Deed of Mutual Covenant
The problem a deed of mutual covenant has to solve
In a Hong Kong multi-storey building the rules that govern every flat are in a deed of mutual covenant, but the deed is signed only by the developer and the first purchaser, sometimes with the manager. Every later buyer of a flat is a stranger to it.
Under the ordinary law of contract a stranger is neither bound by a contract nor able to enforce it, so the question for this chapter is how the deed reaches owners and occupiers who never signed it.
Sections 39, 40 and 41 of the Ordinance
The answer is to treat the deed as a covenant relating to land.
Section 39(1) deems such a covenant made with the covenantee and his successors, and section 40(1) deems it made by the covenantor for himself and his successors. Section 41 then makes covenants relating to land run with it, positive or restrictive, so that they can be enforced against occupiers, the covenantor and his successors by the covenantee and his successors.
It provides the remedies, an injunction including a mandatory one, money due, damages and a declaration, and it makes a covenant in a registered instrument binding on successors whether or not they knew of it.
The important limit is section 41(5): a positive covenant, to spend money or do something, cannot be enforced by the section alone against a lessee, anyone claiming through a lessee, or a mere occupier.
What sits inside the deed
The chapter then opens up a typical deed: the parties, the identification of common parts, undivided shares that represent ownership and carry voting rights, management shares that set each owner's share of expenses, the manager's appointment and powers, service charges recoverable as a debt, owners' repair obligations and restrictions on alterations, nuisance and signage, and the rules for owners' meetings.
It places the deed beside the Building Management Ordinance, which supplies a default list of common parts and the machinery of the owners' corporation and its management committee.
What this chapter covers
- 01
Why a covenant binds only the parties as a contract
- 02
The benefit of covenants under section 39
- 03
The burden of covenants under section 40
- 04
Section 41: running with the land and the remedies
- 05
The positive covenant limit in section 41(5)
- 06
Registration and notice under section 41(9)
- 07
Undivided shares and management shares
- 08
Common parts, the manager and owners' meetings
Worked example · free
Can a residential-use covenant be enforced against a tenant
- 2Show that section 41 applies to the user covenant.
- 2Explain why the owner is bound although he never signed the deed.
- 4Explain why the tenant is bound and name the remedy.
Key terms
- Deed of Mutual Covenant
- The deed governing a multi-unit building, setting out owners' rights and duties over their units and the common parts.
- Positive Covenant
- A covenant to spend money, do something, or otherwise act, which section 41(5) stops being enforced against lessees and mere occupiers by the section alone.
- Restrictive Covenant
- A covenant that forbids a use of land rather than requiring an act, enforceable under section 41 against occupiers.
- Undivided Shares
- The shares in the land and building allocated to each unit, which represent legal ownership and generally carry voting rights.
- Management Shares
- The shares that fix each owner's proportion of management expenses, often weighted by the size or type of unit.
- Common Parts
- The parts of a building shared by all owners, such as external walls, roofs, lifts and staircases.
Land Covenants and the Deed of Mutual Covenant FAQ
Am I bound by a deed of mutual covenant I never signed?
Usually yes. The deed is treated as a covenant relating to land, and section 41 of the Conveyancing and Property Ordinance makes such covenants run with the land so that successors in title are bound. If the deed is registered in the Land Registry, section 41(9) binds you whether or not you knew about it. Every flat owner is also a tenant in common of the whole building.
Can the owners' corporation enforce the deed against my tenant?
It depends on the covenant. A restrictive covenant, such as a ban on non-residential use, is enforceable under section 41 against occupiers, including a tenant. A positive covenant, such as an obligation to pay towards repairs, cannot be enforced by the section alone against a lessee or a mere occupier under section 41(5), so that claim lies against the owner.
What is the difference between undivided shares and management shares?
Undivided shares represent each owner's legal ownership of the land and building, are tied to the unit and cannot be separated from it, and generally decide voting at owners' meetings. Management shares decide how management expenses are divided, and are often allocated more heavily to larger flats, commercial units, car parks or clubhouses. The deed of mutual covenant sets out both.
Exam move
Learn section 41 as a sequence of four questions: does it apply, whom does it bind, is the covenant positive or restrictive, and which remedy fits. Then take two clauses from any deed you can find, one about paying and one about use, and run each through the four questions.
Working through Land Covenants and the Deed of Mutual Covenant in RECO3037? Sia is AskSia’s AI Law tutor — ask any RECO3037 Land Covenants and the Deed of Mutual Covenant question and get a clear, step-by-step explanation grounded in how RECO3037 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
