Transfer of Burden
| Author | Christopher Jessel |
| Pages | 169-179 |
Chapter 14
Transfer of Burden
14.1 PRELIMINARY
Since positive covenants do not bind a successor, the effect of a transfer of the servient land will be to release the obligation so that the new owner will not be bound. The devices discussed in this book are intended to overcome that difficulty. The dominant owner will wish to ensure that a successor to the covenantor assumes the burden and so will need to establish liability.
One approach that is not available is the use of the LPA 1925, s 79(1) which provides:
A covenant relating to any land of a covenantor or capable of being bound by him, shall, unless a contrary intention is expressed, be deemed to be made by the covenantor on behalf of himself his successors in title and the persons deriving title under him or them, and, subject as aforesaid, shall have effect as if such successors and other persons were expressed.
This subsection extends to a covenant to do some act relating to the land, notwithstanding that the subject-matter may not be in existence when the covenant is made.
In Rhone v Stephens,
Mr. Munby submitted that the decision in the Austerberry case had been reversed remarkably but unremarked by section 79 of the Law of Property Act 1925 which, so far as material, provides ... : [He then quoted from the section]
170 Positive Covenants and Freehold Land
This provision has always been regarded as intended to remove conveyancing difficulties with regard to the form of covenants and to make it unnecessary to refer to successors in title. A similar provision relating to the benefit of covenants is to be found in section 78 of the Act of 1925. In Smith and Snipes Hall Farm Ltd. v River Douglas Catchment Board
In Sefton v Tophams Ltd
The section therefore merely implies words into a covenant. If it relates to land then, even if it is not drafted to refer to successors in title, the original covenantor remains potentially liable for the acts and defaults of those successors. It does not affect the legal rule that a positive covenant can not be directly enforced against them.
14.2 VOLUNTARY TRANSFER OF WHOLE
If the whole of a servient unit is transferred, the whole burden needs to pass with it. On a sale the contract can cover any mechanism to extend the burden to a successor. The dominant owner will rarely be a party to that contract so both seller and buyer of the servient land may seek to avoid the liability. Thus if they ignore a covenant, such as that on any disposition the covenantor will impose a similar covenant on a transferee, then the covenantee is left with a claim against the original covenantor who may disappear after the sale. Even if the buyer gives an indemnity covenant, the dominant owner can not sue direct, but would need to
locate the original covenantor who would sue the next owner in the chain, and so on until the current owner is reached.
If the covenant is secured by a restriction on the register the transferee will need to satisfy the terms of it before the Land Registry will change the proprietorship register. The transferee will have to give a deed of covenant in favour of the neighbour or manager and then, according to the form used, either issue a certificate that such a deed has been executed or obtain a consent from the person referred to in the restriction. That certificate or consent will be produced to the registry before registration can proceed.
If the covenant is secured by a rentcharge then that, like any charge, automatically binds the land in the hands of successors so no specific action needs to be taken. The LPA 1925, s 77(1)(a) implies a covenant by a person conveying for valuable consideration (broadly on sale) that the buyer will pay the charge (or any apportioned part) and perform the obligations under the instrument creating the rentcharge and will indemnify the seller.
A right of re-entry (provided it is entered on the register) binds the land and would come into operation if and when the covenant is broken. The person entitled to the right is not prejudiced by the fact that the original covenantor has transferred the land to someone else.
If the principle of benefit and burden is used the new owner can only exercise the easement on paying the service charge so that the obligation continues as a matter of law.
Normally a lease which is intended to create a virtual freehold will be freely assignable but it may sometimes be subject to the landlord’s consent.
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