Q&A: Are restrictive covenants extinguished if land ends up back in the ownership of the person who imposed them?

Can restrictive covenants be extinguished when the land ends up back in the ownership of the person who imposed them? So where A imposed covenants on B, B then sold back to A and then A sold to C, will C be bound by the covenants or is there an argument they have been extinguished by A having re-acquired? 

References: Texaco Antilles Ltd v Kernochan [1973] 2 All ER 118Re Tiltwood, Sussex [1978] 2 All ER 1091

A restrictive covenant will generally be extinguished where there is unity of seisin (eg of possession and ownership) between the land with the burden and the land with the benefit. It is necessary for both parcels of land to be held in fee simple. In Re Tiltwood, Sussex, Foster J citing the dictum of Lord Cross of Chelsea in Texaco Antilles Ltd v Kernochan (a Privy Council case), held that ‘where the fee simple of the benefited and the burdened land is vested in one person, the restrictive covenants are extinguished unless the common owner recreates them’. 

References:University of East London Higher Education Corp v Barking and Dagenham LBC [2005] 3 All ER 398

There are however exceptions to this rule. A relatively narrow exception is where the fee simple of the benefited and the burdened land is held by the same person but for different public purposes. In University of East London Higher Education Corp v Barking and Dagenham LBC there was held not to be an extinguishment of a restrictive covenant where the London Borough of Barking and Dagenham held the freehold titles of the benefited and burdened land but for different purposes (namely housing and education). In University of East London Higher Education Corp Lightman J also highlighted that he considered that the same principle would apply if the same trustee held the fee simple of the benefitted and burdened land but as the trustee of separate trusts. 

References: Brunner v Greenslade [1970] 3 All ER 833

A notable exception is where restrictive covenants are imposed where there is a scheme of development (also known as a building scheme). Megarry J in Brunner v Greenslade stated that he did not think the extinguishment of restrictive covenants when there is unity of seisin precluded ‘the application of a scheme of development as between purchasers of lots merely because they were initially in one hand’. This view was endorsed in Texaco Antilles Ltd where it was stated that where a scheme of development existed it could not be said that ‘an action by one owner of a part against another owner of a part must fail if it can be shown that both parts were either at the inception of the scheme or at any time subsequently in common ownership’.

So, in general terms, where A imposed covenants on B, B then sold back to A and then A sold to C, there will be an argument that the covenants have been extinguished by A having re-acquired the land unless the land is held for different purposes (as set out above) or where there is a scheme of development.

There are proposals for reforming the law in this area. If the Law Commission’s proposals for the reform of restrictive covenants (published in 2011) are enacted, then ‘land obligations’ would replace restrictive covenants for registered land (there would be no effect on the status or legal effect of existing restrictive covenants). The benefit and burden of these ‘land obligations’ would be registered and, mirroring the Law Commission’s proposals in respect of easements, that the automatic extinguishment of these ‘land obligations’ if the parcels of land came into common ownership would be abolished.

This article was written by Associate Oliver Park at Charles Russell Speechlys LLP and was first published on the Lexis Nexis Ask Forum on 25 April 2020.