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Slide 1 - Geomatics The University of Melbourne_ australia

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					Land Covenants
Covenants – an introduction
   As with most agreements concerning property, a
    covenant is an agreement or an undertaking
    under seal
     Thatis, the obligation is set out in a clause of a deed
      which is signed in the presence of a third party
   Two types of covenant:
    A  positive covenant requires a person to do some
      action specified in the covenant
     A negative or restrictive covenant requires a person
      not to do some action specified in the covenant. A
      land covenant is a restrictive covenant the subject of
      which touches and concerns land
Transfer of Land Act
   Section 88(1) of the Transfer of Land Act provides that the
    burden of a restrictive covenant may be recorded on the
    Certificate of Title which is subject to the restriction –
       The Registrar shall have power and shall be deemed always to have
        had power to on the folio of the Register for land subject to the burden
        of a restrictive covenant make a recording of such covenant and of any
        instrument purporting to create or affect the operation of such covenant,
        and when such covenant is released varied or modified by agreement of
        all interested parties or by order of a competent court to delete or
        amend that recording.
   Note that recording an interest is not the same as
    registering it, and this seems to be confirmed by s 88(3),
    which provides –
       Apart from the operation of Part III a recording in the Register of any
        such restrictive covenant charge easement or right shall not give it any
        greater operation than it has under the instrument or Act creating it.
What is the difference?
   If a covenant is not recorded on the certificate of
    title then a person acquiring the land, certainly if
    they have no other notice of the covenant, takes
    free of it
   But it is not as simple as the legislation provides
   Even if a covenant is registered, it is necessary
    to evaluate the validity of a covenant according
    to the complicated rules of common law and
    equity
To illustrate by example:
 Andrew owns land on which a gigantic tree stands.
 One day he is about to chop it down. His neighbour,
 Bianca, runs into his yard imploring him to stop.
 Andrew explains that he loves the tree but needs
 firewood. So Bianca pays Andrew half the value of
 the firewood in the tree and they enter a land
 covenant which purports to bind anyone who
 acquires Andrew’s land to preserve the tree for the
 benefit of Bianca’s land. The covenant is recorded
 on the certificate of title. Beatrice sells her land to
 Christopher and Andrew sells his land to Dolores.
Questions raised in this example
   At common law it is clear that the original agreement and
    the covenants are legally enforceable between the
    original parties to a deed (here Bianca and Andrew)
   However, when the subject of the covenant (preservation
    of the tree) concerns land, is the covenant also
    enforceable against a person who acquires the land from
    the person who entered the original covenant (Dolores)?
   The further question arises of whether a person
    acquiring the benefited land (Christopher) also acquires
    the benefit of covenants
   Put simply, does the covenant run with the land?
Making the Burden Run with the
Land
   At common law, the burden of a covenant
    does not run with the land
   There are conveyancing devices to
    overcome this, such as requiring the parties
    to the covenant to make fresh covenants
    every time the land is transferred
Making the Burden Run with the
Land
   In Equity, the burden of the covenant can run with the
    land if the following conditions are met:
     the covenant must be for the benefit of the dominant land
     it must be a restrictive; that is, a negative covenant
     the covenantee must hold the benefited land at the time
      the covenant is created
     there must have been intention to bind successors in title
     a purchaser of the land must have notice of the burden of
      the covenant when acquiring the land - with respect to
      registered title, that means recording the burden on the
      certificate of title, and
     the covenant must „touch and concern‟ the land by directly
      affecting the enjoyment, quality or nature of the land
Making the Benefit Run with the
Land
    There are three arguments for the benefit of a
     covenant to run with the land.
1.   Statutory Annexation: Section 78 of the
     Property Law Act provides that the benefit of a
     covenant is deemed to have passed with
     conveyance of the dominant land to the
     successor in title (there is some dispute about
     the meaning of this section)
Making the Benefit Run with the
Land
     Note: the benefit of a covenant can be expressly assigned to a
     purchaser of the land

2.   It can be argued that the benefit of the covenant runs with the
     land at common law. You can argue that the benefit has become
     annexed to the dominant tenement at common law. The following
     must be met:
        the benefit must have been annexed in the sense of becoming a
         feature of the land, perhaps by enhancing its value - it must "touch
         and concern" the land
        it must have been intended that the benefit would run with the land
        the dominant land must be identified in the document creating the
         covenant, and
        the covenantee must have a legal estate in the dominant land and the
         successor in title must obtain the same interest. An equitable interest
         in the land is not sufficient
Making the Benefit Run with the
Land
3.   It can be argued that the benefit runs with the land at
     Equity – Equity permits annexation of the benefit of the
     covenant to the dominant land so that express
     assignment is not necessary, when:
        the covenant must "touch and concern" the land, perhaps by
         preserving its character or amenity,
        there must have been intention to annex the benefit of the
         covenant to the land, and
        it must be possible to identify the dominant land
    In Equity it is also possible to make an express
     assignment of the benefit of a covenant at the same time
     as one transfers the land itself to a purchaser
Doctrine of Building Schemes
   When subdivision of land became popular the Courts of
    Equity also adopted a doctrine called the Doctrine of
    Building Schemes to deal with this
   Under this doctrine any land owner within a subdivision
    could enforce the subdivision's covenants concerning
    land use against any other land owner in the subdivision
   Five elements are referred to for guidance:
       the land owners had to be able to trace their titles back to a common
        vendor
       a common plan of development must have been laid out for the
        subdivision
       the plan must have been intended to benefit all subdivided lots
       purchasers must have bought their lots on the basis that the
        development plan was for their benefit
       it must be possible to identify the land
Subdivision Act
   A far simpler method of creating a land covenant is
    provided by the Subdivision Act 1988
   Under this method a planning scheme featuring the land
    covenant is submitted for approval by the local council
   When approved it becomes part of the local planning
    scheme and binds successors in title
   While this simplification seems very desirable, there
    have been criticisms of it from the view of land owners,
    as opposed to public administrators (lack of flexibility in
    individual circumstances)
Discharging a Covenant
   A land covenant can be discharged by agreement of the
    parties to it
   Also, the benefit of the land covenant might lapse
    through acquiescence to activities in breach of it
   The covenant might also discharge if title to the
    dominant land and the servient land is ever acquired by
    the same person (like easements)
   Section 84 of the Property Law Act empowers the
    Supreme Court to discharge or modify a restriction if has
    become obsolete through change in the character of the
    properties or the neighbourhood
Discharge – Planning Schemes
   The planning system also provides for the discharge of
    private land covenants: You can:
       seek amendment of the Planning Scheme affecting the land, or
       apply for a planning permit
   Generally this will involve the Planning Department of
    the local municipal council
   Of course, one would have to support these initiatives
    with material showing why the covenant should be
    discharged
   The statutory scheme establishing these procedures is
    complicated, relying partly on the Planning and
    Environment Act 1987 and partly on the Subdivision Act
    1988 (provisions are set out in your notes)
Profit à Prendre
What is a profit à prendre?
   A profit à prendre is a property interest known as
    a usufruct
   A profit à prendre is a right to take part of the soil
    or part of the produce of the soil from the land of
    another
   examples of profits à prendre:
    a  right to take gravel from a gravel pit
     a right to depasture cattle on the servient land
     a right to harvest fruit from an orchard
Rules governing profits à prendre
   The rules governing profits are basically the same as
    those governing easements except in two important
    respects:
       although a profit is often appurtenant to dominant land this is not
        essential. The law recognises profits in gross as valid property
        rights
       as property rights, the benefits and burdens of easements and
        profits would usually pass to the successors in title. Profits need
        to be registered – a purchaser who becomes registered as
        proprietor will not be subject to an unregistered profit that
        existed prior to obtaining registration of the transfer of the fee
        simple estate
   In contrast, section 42(2)(d) preserves an easement as a
    paramount interest, but there is no equivalent provision
    in relation to profits.
Profit à Prendre vs licence
   A profit is likely to resemble a mere contractual licence
    (see discussion on licences in previous lectures)
       Eg, a grazing licence: confers no proprietary interest in the land
       This resembles an informal profit
       But – it is a mere contractual licence (difficult to distinguish)
   Important distinguishing factor between profit and
    licence: A profit is a full legal proprietary interest in land
    – a profit à prendre can be mortgaged
   A profit à prendre can be dealt with independently of the
    fee simple estate
Mortgages
Two types of Mortgage in Vic
   Generally, a mortgage is an arrangement designed to give a lender
    the highest degree of certainty of being repaid money due on the
    debt by providing security over land owned by the borrower
   In the Victorian legal system there are two legal conceptions of a
    mortgage:

   General Law Mortgage:
      Mortgage over General Law land
      It remains the model common law conception of a mortgage
      Most legal principles concerning mortgages have been developed from
       it
      As always, these principles often fit uneasily with the structure of the
       Torrens mortgage over land
   Torrens mortgage
        Considerably simpler than the general law mortgage
        This is the most common mortgage of land in Victoria
The General Law Mortgage
   A general law mortgage takes is a legal conveyance by the land
    owner/borrower to the mortgagee/lender
   Importantly, the borrower is then no longer the owner of the fee
    simple estate
   Rather, the borrower is a mortgagor who is entitled to have the fee
    simple reconveyed when all money has been repaid
   The mortgagor retains an interest in the land (known as an equity
    to redeem the legal estate) until the date on which payment is due
   After that date, if repayment has not been made, the mortgagor's
    interest is known as an equity of redemption
        Although the due date has passed the mortgagor can still pay what is
         due and require a reconveyance, until the mortgagee has validly
         obtained possession and exercised its power of sale
   It should be noted that it is possible to make a general law mortgage
    of any estate or interest in land
The General Law Mortgage
   The general law deed of conveyance usually includes
    the following:
       a covenant by the mortgagor to pay the principal sum lent and
        interest on a fixed date, usually six months after the date of the
        mortgage
       a proviso under which the mortgagee covenants to reconvey the
        fee simple estate to the mortgagor if the mortgagor pays the
        money due under the terms of the mortgagor's covenants, and
       a clause under which the mortgagee, as legal proprietor of the
        fee simple estate, permits the mortgagor to retain possession of
        the land in a relationship of landlord and tenant (an "attornment
        clause")
Equitable Protection for the
Mortgagor
   So, the mortgagor under this system requires some
    protection in equity …
   Under the general law mortgage, mortgagor only has a
    right to a reconveyance if repayment is made by the due
    date (the Common Law position)
   Courts of Equity however recognised that the mortgage
    was intended to operate as security for the repayment
    and for this reason the mortgagor has „an equity of
    redemption‟ enforceable in equity after the due date
   The following rules in Equity have been developed:
       A provision increasing the rate of interest in the event of late
        payment was void
       There must be a genuine right to redeem the land
Mortgages under the Transfer of
Land Act
   A mortgage under the Transfer of Land Act is created by
    registration of an instrument (in a prescribed form) by the
    Act
   It operates as a security (not transfer of fee simple
    estate) s 74(2)
   So, the mortgagor remains the legal owner of the land
   But the mortgagee has certain powers, such as:
       the power to enter and inspect s 75(c)
       a power of sale upon default s 77
   Much simpler – your notes will reveal how complex the
    general law system is, but we are not going to get into it
    today
Remedies Available to the
Mortgagee
    If the lender does not have the same extent of ownership of a
     property, what remedies are available under a Torrens
     mortgage?
    A mortgagee under a Torrens mortgage has the following
     powers in relation to a mortgagor in default:
1.   The mortgagor must pay principal and interest, keep the premises in repair,
     keep them insured and permit the mortgagee to inspect
2.   to sell and transfer a good title to the purchaser once certain conditions are
     satisfied ss 76 and 77.
3.   to be able to enter into possession upon default in payment of principal or
     interest s 78.
4.   to foreclose s 79
5.   The power to appoint a receiver s 101(c) and s109 (Property Law Act)
6.   The express powers of leasing conferred on a mortgagor or a mortgagee in
     possession of general law land under a general law mortgage by s 99 of the
     Property Law Act are not conferred in relation to land under the Transfer of
     Land Act
Popularity of Mortgages
   Popular with lenders: The law provides so many
    mechanisms to ensure that a lender's interests in
    recovering interest and capital are protected the
    arrangement is popular with lenders.
   Popular with borrowers: A mortgagor under a Torrens
    mortgage who honours mortgage obligations enjoys
    continued occupation of the property and remains
    registered proprietor of the legal estate
   Popular with both lenders and borrowers: The law
    permits the arrangement to be fine-tuned to suit the
    precise interests of the parties, and in unique or
    extraordinary transactions this is done
Adverse Possession
Introduction
   Adverse possession is the idea that if one obtains
    possession of land and holds it for long enough one
    might eventually become the owner of it
   It is less well known that even before the time arrives to
    obtain full title, or “tolls”, the adverse possessor enjoys a
    strong position in relation to all other people, apart from
    the true owner of the land entitled to it by “paper title”
   The mere act of possession gives this strong position to
    exclude all others
   An interesting concept
How adverse possession begins
   With respect to general law land, except against the true
    owner by virtue of paper title, the general law simply
    regarded a person in possession of land as the owner of
    the fee simple estate
   A person in adverse possession therefore starts to
    acquire the title against even the true owner from the
    time when their possession
   Until the time arrives when a right equivalent to full
    ownership is obtained (15y) the adverse possessor has
    an inchoate title - that is, one which is growing
   When adverse possessors themselves suffer adverse
    possession by a newcomer, this inchoate title is
    generally strong enough to obtain a court order to
    recover the land from the newcomer.
Surprising set of Rules
   Surprisingly, the law also regards a person in possession as holding
    very strong status
   Section 42(2)(b) makes the rights of an adverse possessor a
    paramount interest (like easements etc)
   Further, a person acquiring a new registered estate or interest in the
    land acquires it subject to the adverse possessor's rights,
    whether the acquirer knew about them or not.
   If the period has not already expired the new acquirer can expel the
    adverse possessor
   If the adverse possessor is not expelled, s 42(2)(b) has the effect
    that periods of time accumulated against an earlier owner of the land
    are still good, and can be added to new periods, against the
    acquirer.
   If the period had already expired when the new acquirer came
    along, s 42(2)(b) has the effect that the new acquirer has bought
    only a faint hope that the adverse possessor will move off of his or
    her own accord, without selling the title obtained by possession.
An Example
   Most people think adverse possession happens out
    in the bush where the true owner would not often go
   In fact, most adverse possession occurs on
    boundaries when fences or building walls and
    foundations encroach on to the neighbour's land
   This is why it is of particular relevance to surveyors
S272 Property Law Act
   A limitation in the circumstances of boundary encroachment is
    section 272 of the Property Law Act:

    From and after the first day of August One thousand eight hundred and ninety the
    dimensions of the boundaries of any parcel of land as stated in any document of title
    now made or hereafter to be made relating to such land, or as represented on any
    plan drawn on or referred to in any such document of title shall unless such
    construction is expressly negatived or modified by such document of title or contract
    be construed as though the phrase "a little more or less" immediately followed and
    referred to the dimensions so stated or represented; and such phrase shall in all
    cases whether so implied or expressed be deemed to cover any difference between
    the actual dimensions of such boundaries as found by admeasurement on the
    ground, when such difference does not exceed the following limits, that is to say, a
    limit of 50 millimetres for any one boundary line irrespective of its length where the
    length does not exceed 40.30 metres, but where it exceeds 40.30 metres a limit
    equivalent to one in five hundred computed upon the total length of such boundary
    line. No action shall be brought by reason or in respect of such difference (whether of
    excess or deficit) where it does not exceed the aforesaid limits; and in any case
    where such difference does exceed such limits an action for damages or
    compensation in respect thereof shall lie in respect of such excess only.
Basis of Adverse Possession
   Limitation of Actions Act 1958
   The basis of the law of adverse possession is trespass
   Section 8 of the Limitation of Actions Act 1958 provides
    that -
       No action shall be brought by any person to recover any land
        after the expiration of 15 years from the date on which the right
        of action accrued to him or, if it first accrued to some person
        through whom he claims, to that person:
       Provided that if the right of action first accrued to the Crown the
        action may be brought at any time before the expiration of fifteen
        years from the date on which the right of action accrued to some
        person other than the Crown.
Adverse Possession - Trespass
   A title acquired by adverse possession is essentially a title
    acquired by trespass
   When even the true owner can no longer take legal action to
    recover the land the trespasser's title is good against all the world
   At general law the trespasser has obtained legal title and the
    former owner's title has been extinguished
   An act of trespass cannot occur by someone simply wandering
    onto land by mistake and wandering off again. Rather than being
    a mere physical penetration of the boundaries
   At law trespass is a deliberate act by which the trespasser
    assumes rights in relation to the land generally incident to
    ownership.
   The positive intention to do this is called animus possidendi
Exceptions etc
   If the act is done with the permission of the owner it is
    not trespass
   Some interesting cases have arisen where the owner
    has been content to leave the land waste and totally
    unproductive in anticipation of some development (eg a
    highway being built, or the outskirts of the city
    expanding)
   It has been argued in these cases that the trespass
    against the owner does not commence until the owner
    would wish to use the land
   This argument has been contemplated seriously in
    English cases but not in Victoria.
When does time start to run?
   Time does not start until someone takes
    possession adversely, and time will cease to run
    if the land ceases to be held in adverse
    possession before the owner's right to
    commence court action is barred
   Section 14(3) and (4) provide two instances
    where adverse possession is deemed to exist:
     wrongful receipt of rent under a lease, and
     possession or receipt of more than the due  share of
      land, or receipts from the land, by a co-owner.
Special Circumstances
   Crown Land: The Crown is never barred, and time only
    starts to run in favour of the adverse possessor when the
    land is included in a Crown Grant
   Future interests: time starts to run when the future interest
    becomes an interest in possession. Eg, an interest taking
    effect after a life estate, time starts to run when the life
    tenant dies. This provision has no effect if the land is
    already in adverse possession when the future interest is
    created
   Forfeiture and breach of condition: Time runs from the
    time of the forfeiture or breach. But the right to recover for
    forfeiture or breach by virtue of the future interest will not be
    affected.
Tenancies
   Tenancies Tenancy at will: Time will start to run when the
    tenancy is determined, and it will be deemed to be
    determined one year after its creation if it is not determined
    earlier
   Periodic tenancies: Time runs from the end of the first
    period of the tenancy, but if rent is subsequently received it
    will run from the date of the last receipt
   Leases in writing at a rent above $2 per year: Possession
    by a tenant under a lease for a term absolute is never
    adverse to the landlord. But time will run against the
    landlord and in favour of another person who claims to
    be entitled to the land subject to the lease if rent is paid
    to that person and not to the landlord
Extension of the Limitation Period

 Disability
 Acknowledgement
 Concealed Fraud
Disability
   The definition of disability is in s 3(2) and (3) of the Limitation
    of Actions act and includes a person:
      who is under age, or
      who is subject to a guardianship arrangement for intellectual disability
   s 23(1) provides for the case where the owner was under a
    disability when the right of action first accrued
   The period may be extended for 6 years from the date when
    the owner ceases to be under a disability
   If the owner was a minor when the right to commence legal
    action to recover the land accrued, he or she will not cease to
    be under a disability if he or she becomes subject to a
    different disability, such as unsoundness of mind, before
    reaching full age
   In these cases, the 6 years will only begin to run from the date
    when the true owner recovers from the disability or dies
Disability
   But there is an overall limit of thirty years on the period
   So, for example, if the relevant disabilities extend for 28
    years from the date of first adverse possession the
    section operates to extend the right for only 2 years, not
    for 6 years
   It was Land Titles Office practice for many years not to
    accept an application for registration based on adverse
    possession until 30 years had elapsed unless it could be
    proved positively that the true owner had not suffered a
    disability
Acknowledgement
 What if the adverse possessor
  acknowledges (in writing and signed by
  the adverse possessor or an agent) the
  title of the true owner?
 A new period of limitation commences
 Such an acknowledgment binds everyone
  in possession during the ensuing period
Concealed Fraud
   Where a right of action is concealed by the fraud
    of the defendant or an agent, or some person
    through whom the claim is made, time begins to
    run when the plaintiff discovers the fraud or
    when the plaintiff could with reasonable
    diligence have discovered it
   The legislation also protects an honest
    purchaser against fraudulent concealment
Stopping Time Running
   Time will cease to run if the owner succeeds in ejecting
    the adverse possessor
   A new period of limitation will start to run from the time
    when the adverse possessor resumes possession
   Note that time does not cease to run when the owner
    merely makes a formal entry on the land or when he or
    she merely makes a verbal or written claim to ownership
   When a writ to recover the land is issued time has
    ceased to run as at the date of issue of the writ
Equitable Estates
 No period of limitation applies to an action
  by a beneficiary under a trust to recover
  from the trustee trust property, or the
  proceeds of trust property
 In general, the owner of an equitable
  estate is subject to the same rules as if his
  or her estate were a legal estate
Effect of Adverse Possession on
Title
   With some exceptions, the rule is that when any person's
    right of action is barred then his or her title to the land is
    extinguished
   When the maximum period applicable has expired the
    Land Titles Office will register the adverse possessor as
    the proprietor of the estate acquired
   The important exceptions are:
       the estate of a tenant for life, or of statutory owner under the
        Settled Land Act, is preserved so long as any person entitled to
        a beneficial interest in the land is not barred
       the estate held by a trustee is preserved until every person
        entitled to a beneficial interest is barred

				
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