Key points

  • A restrictive covenant entered into by an owner of unregistered land must be registered as a land charge if it is to bind successors in title
  • If the land charge is mistakenly missed off the title on first registration of the burdened land, the register may be liable to be corrected

Facts of Rees v Peters

In 1957, Kathleen Freeman sold Farne House to the predecessors in title of the claimants. Mrs Freeman entered into a restrictive covenant in the transfer in relation to the land she retained. As this retained land remained unregistered, the covenant was duly registered at the Land Charges Registry against Mrs Freeman.

In 1990, the retained land was sold by the personal representatives of Mrs Freeman to the defendant, Mr Peters. The transfer triggered first registration, and Mr Peters was in due course registered as proprietor. However, the newly created title made no mention of the 1957 covenant.

The claimants sought a declaration that the covenant was binding on Mr Peters, and the rectification of the charges register of his title to refer to the covenant.

Was the current owner bound by the covenant?

Mr Peters was bound by the covenant when he bought the land, since the land was unregistered when he bought it, and the covenant had been duly registered as a land charge. Mr Peters was also fully aware of the covenant, since the conveyance to him expressly stated that the land was sold subject to it.

It was clear that, on first registration, the charges register should have made reference to the covenant. The fact that it did not was a mistake. The Land Registration 2002 contains a mechanism for the correction of mistakes on the register. However, it also provides that no correction which would prejudicially affect the title of a registered proprietor may be made without the proprietor's consent where the proprietor is in possession, save where it would be unjust not to make the alteration.

The court ruled that, although the claimants would be entitled to compensation if the mistake was not corrected, this was "of little value" when compared with specific enforcement of the covenant. It held that, in light of the fact that Mr Peters had actual notice of the covenant at all times, it would be unjust not to order the alteration of the charges register of Mr Peters' title to include the covenant.

Things to consider

If Mr Peters had sold the land to a third party before the mistake had been corrected, it is unlikely that the court would have ordered the register to be rectified, as the buyer would not be bound by the covenant as a matter of land law. It is submitted that this would be the case even if the buyer had actual knowledge of the covenant.