Legal Principles and Key Points
- In the case of Tulk v Moxhay 1848 2 PH 774, it was found that prior to the Land Registration Act 1925 which made covenant’s a registrable interest, they were to be binding on future buyers of the property in which the covenant was attached to.
Facts of the Case
- The C (Tulk) owned multiple properties in London, mainly Leicester Square.
- When C would sell a property, he would make the purchaser promise not to add or build on the property to avoid Leicester Square being covered in buildings. By doing this c created an equitable covenant.
- The buyer of the property sold the land to the D.
- D was aware of the covenant at the time of transaction but claimed it was not enforceable as he had not been a party to the original contract when the covenant was made.
Issues in Tulk v Moxhay 1848 2 PH 774
- The main issue in this case was whether an equitable covenant can bind a future owner of land to which the covenant is attached to.
Held by High Court (Chancery Division)
- Held in favour of C that the covenant was binding on future buyers.
- Lord Cottenham found in favour of C and passed for an injunction to prevent D from building on the land in question. As the covenant had been intended to attach to the land over time, future purchasers were bound by it.
- As the D had prior notice of the covenant, he was further obligated by it along with a covenant being a contract, making it enforceable against a purchaser for value with either constructive or actual notice.
- “The court has jurisdiction to enforce a contract between the owner of the land and his neighbour purchasing as part of it, that the latter shall either use or abstain from using the land purchased in particular way, is what I never knew disputed. Here there is no question about the contract, the owner of certain houses in the square sells the land adjoining, with a covenant from a purchaser not to sue it for any other purpose than as a square garden. And it is now contended, not that the vendee could violate that contract, but that he might sell the piece of land, and the purchaser from him may violate it without this Court having any power to interfere. If that were so, it would be impossible for an owner of land to sell part of it without incurring the risk of rendering what he retains worthless. It is said that the covenant being one which does not run with the land but whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which he purchased. Of course, the price would be affected by the covenant, and nothing could be more inequitable than the original purchaser should be able to sell the property the next day for a greater price, in consideration of the assignee being allowed to escape from liability which he had himself undertaken”.