Covenant Does Not Pass on with Title to Property

A recent court decision illustrates that where ownership of land changes, rights conferred by covenants over neighbouring land are not necessarily passed on to the new owners.

In this case, the former owners of a house had sold part of their garden for development. In order to protect their own position, the conveyance contained covenants restricting the use of the land that was sold.

Specifically, the covenant:

• prohibited the erection of any building on the land other than a single dwelling;
• required that the dwelling house had to be built in accordance with plans approved by the vendors or their surveyor (approval not to be unreasonably withheld); and
• required the owners of the land not to make any structural alterations without the approval of the vendors or their surveyor (approval not to be unreasonably withheld).

The land was duly sold and a house built on it. The buyers later sold the land on, and the new owner decided to demolish the existing house and replace it. The original vendors had died by this time, and the question arose as to whether the new owners needed to seek permission from the successor in title to the original vendors.

The court ruled that the power to withhold consent applied to the original vendors only. They would have been seeking to protect the value of their land by having the restriction. Accordingly, the covenant that their permission was necessary did not survive them. Nor did the covenant thereby create a perpetual restriction on development of the property.

Decisions on such matters often turn on the wording of the covenant. It is interesting to note that in another recent case, involving similar circumstances, the courts reached a different conclusion.