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Chapter 14. RESTRICTIVE COVENANTS

WHAT IS IT? Covenant is a word that means promise. In property law, a common law covenant is a promise by one landowner to another landowner to do, or not do, something in relation to his or her land. 178 The land burdened by the common law covenant is called the servient tenement. The land which gets the benefit of the rights or the restrictions is called the dominant tenement.

A covenant by a landowner to do something in respect of his or her land is a positive covenant. A covenant by a landowner not to do something in relation to his or her land is a negative covenant. 179

You may think that it would make no legal difference whether landowner S was promising to do something to his or her land, or not to do something to his or her land. But it makes a big difference. 180 If you, a landowner, grant me a covenant 181 that benefits my land, and you break the covenant, I can always sue you. If you covenanted not to flood my land, and you did, I would have a remedy against you. If you covenanted to let water run onto my land, and you did not, I would have a remedy against you. So far so good.

But if you sell the land, is the new owner required to fulfil the covenant that you made to me? The answer, 182 according to the common law, is that only a negative covenant 183 can run with the land, that is, become part of the title of your land. And even then, I can enforce the restrictive covenant against the new owner, who bought the land from you, only if

• the covenant is restrictive or negative in nature,
• the new owner had notice of the covenant, 184
• I own nearby property which is benefited by the covenant, 185
• the covenant touches and concerns my land, 186 and
• the covenant reflects an intention to bind the land and run with it. 187

If you had granted me a restrictive covenant promising not to flood my land, the new owner would be bound and I could sue the new owner if he or she flooded my land. On the other hand, if you had granted me a positive covenant to water my lands, the new owner would not be bound.

AN EXAMPLE. Nature Trust was interested in protecting some marsh land in the Cowichan estuary. But the marsh land was part of a larger property, which also included a home site.

So, Nature Trust bought the entire property, and then subdivided the land into two parts: the marsh portion, and the home site. As part of the steps they took to protect the marshland, they put common law restrictive covenants on the home site portion, for the benefit of the marsh portion. Then they sold the home site portion, now protected by covenants including:

• that no building, structure, dyke or other improvement be built,
• that no livestock be allowed to graze,
• that no snowmobile, dune buggy, motorcycle, all terrain vehicle or any other type of recreational vehicle be operated on the restrictive covenant area, and
• that the surface or subsurface areas ... not be polluted ... with biocides, pesticides, insecticides or any other matter harmful to wildlife and fish.

POSSIBLE APPLICATIONS. While a restrictive covenant might appear to be a perfect tool in the conservation context, since you could get a landowner to agree not to put property to uses that would damage the environment, this tool is not as useful as it may first appear because covenants have been encumbered with so many technical requirements.

For example, given the common law rules it is not clear that a court would uphold the validity of a restrictive covenant drawn solely for conservation purposes. For this reason, West Coast Environmental Law Research Foundation> has recommended that the law be changed to permit a new statutory tool called a conservation covenant which would not have these restrictions. 188

However, there still are some circumstances in which restrictive covenants could be useful. For example, if two or more neighbours were interested in protecting their land, they could enter into mutual restrictive covenants, each agreeing to restrict development or not subdivide. This could be useful, for instance, on waterfront or other recreational property which is under pressure from developers. Such mutual restrictive covenants would protect the pieces of land from particular types of development, at least until all the owners of the affected parcels wanted to permit development.

HOW IS IT CREATED? A restrictive covenant is created by recording the promise in writing and registering it with the land title office on the title of both pieces of land affected by the covenant.

To use a restrictive covenant for conservation purposes, you will want to make sure that

• the covenant is a restrictive covenant,
• both the dominant and the servient tenement are fully described,
• the covenant is specific enough to prevent it being invalid because of vagueness,
• there is a benefit to the dominant tenement from the restrictive covenant, and
• the restrictive covenant makes it clear that the parties intend the covenant to run with the land and bind subsequent purchasers.

HOW LONG CAN IT LAST? A restrictive covenant can last forever, or for a shorter period if the parties agree.

HOW CAN THE LAND BE PROTECTED OVER TIME? The obligation to respect the restrictive covenant lies with the owner of the servient tenement. The conservation organization would not have a right, under a covenant, to enter and inspect the land, but if the organization became aware that the covenant was being breached it could apply to court to enforce the covenant.

In order for a conservation organization to be able to enter and inspect the land, it would be advisable to add provisions specifying that the organization had an easement for that purpose.

HOW IS IT TERMINATED? The dominant tenement owner can release the servient tenement owner from a covenant promise with respect to property by completing the appropriate discharge document and filing it in the land title office. 189

Although the owner of the servient tenement cannot terminate a restrictive covenant unilaterally, he or she may be able to have the court remove the covenant. Under the Property Law Act, a court has the power to terminate a covenant if

• the covenant is obsolete,
• "the reasonable use of the land will be impeded, without practical benefit to others" if the charge is not cancelled,
• the persons who are owners of the dominant tenement have agreed to it being cancelled, or
• the cancellation will not injure the person entitled to the benefit of the charge. 190

It is not clear how a court would treat a covenant drawn solely for conservation purposes under section 31 of the Property Law Act. This uncertainty seriously restricts the usefulness of this instrument.

Advantages

for the conservation organization

1. The restrictive covenant may be relatively inexpensive since it does not involve the purchase of land.
2. The restrictive covenant can be tailored quite precisely to prohibit or permit the uses of the land which are consistent with the conservation purpose.
3. The restrictive covenant can be granted together with an easement permitting the conservation organization to monitor the landowner's compliance with the covenant.

for the landowner

1. The landowner can continue to use the land and bequeath it or sell it with a restrictive covenant on it.
2. The landowner can spell out precisely how much or how little conservation protection will be involved in the land.

Disadvantages

for the conservation organization

1. There must be a dominant tenement nearby, so if the landowner wanted to make the restrictive covenant in favour of the conservation organization, the conservation organization would have to own an anchor parcel.
2. The covenant must be a restrictive covenant. This limits the kinds of conservation interests a covenant can protect.
3. A covenant does not by itself permit the conservation organization to enter and inspect the land, so monitoring the landowner's compliance with the covenant might be difficult, depending on the size of the piece of property and the nature of the covenant.
4. The covenant must be drafted to ensure that the covenant benefits the dominant tenement, and this may not always be possible.
5. There is some risk that if the neighbourhood becomes developed a court may cancel the covenant because it is obsolete.

for the landowner

1. As stated above, there must be a dominant tenement nearby, so if the landowner wanted to make the covenant in favour of the conservation organization, the conservation organization would have to own an anchor parcel.
2. The land may decrease in value, or purchasers may be wary of land encumbered with a restrictive covenant.
3. As stated above, the covenant must be drafted to ensure that the covenant benefits the dominant tenement, and this may not always be possible.
4. As stated above, there is some risk that if the neighbourhood becomes developed a court may cancel the covenant because it is obsolete.

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178. There are covenants in other areas of the law which do not concern us here. Specifically, covenants need not concern land; and a landowner can enforce other types of covenants made by someone who does not own land.

179. Distinguishing between a positive covenant and a negative covenant is not always easy. The form of words is not conclusive: it is the substance of the obligation which is important. If a covenant requires a landowner to spend money, courts will almost always find that the covenant is a positive covenant.

180. At common law, the benefit of a covenant could run with the land; the burden of a covenant whether positive or negative — could not. Equity modified that rule, so that the burden of a negative covenant can run with the land.

181. Your land would be the servient tenement. My land would be the dominant tenement.

182. This is the short answer. The long answer is that at common law, the burden of a covenant was not assignable; but equity softened that rule by specifying that in certain circumstances the purchaser with notice of the restrictive covenant was bound.

183. Whether a covenant is a negative or a positive covenant is inferred from the substance of the obligation, not from particular words used.

184. In British Columbia, a purchaser would always know about it because it would be registered on your title at the land title office.

185. There is a requirement that there be a dominant tenement and a servient tenement. The dominant tenement is the property that is benefited by the covenant and the servient tenement is the property burdened by the covenant. The dominant tenement and the servient tenement must be adjoining which does not necessarily mean side by side, but close by.

186. What counts as a covenant that touches and concerns the dominant tenement is a difficult question. The courts are concerned that the covenant benefit the land per se, and not just the owner of the land. But since owners will almost always benefit if their land benefits — even if just by increased value of their property — it is a tricky distinction.

187. David Loukidelis, Using Conservation Covenants to Preserve Private Land in British Columbia>, above at footnote 3, at Appendix C>.

188. See Chapter 23 on Conservation Covenants.

189. A restrictive covenant is not extinguished by common ownership and possession of the burdened and benefited land: Property Law Act, R.S.B.C. 1979, c. 340, s. 18(8).

190. . Property Law Act, section 31, provides:

31.(1) A person interested in land may apply to the Supreme Court for an order to modify or cancel a charge or interest against the land, registered either before or after this section comes into force, and being an easement, a land use contract, a statutory right of way, a statutory building or statutory letting scheme, a restrictive or other covenant burdening the land or the owner, a right to take the produce of or part of the soil, or an instrument by which minerals or timber or minerals and timber, being part of the land, are granted, transferred, reserved or excepted.

(2) The court may make an order sought under subsection (2) on being satisfied that the application is not premature in the circumstances, and that

(a) by reason of changes in the character of the land, the neighbourhood or other circumstances the court considers material, the registered charge or interest is obsolete;

(b) the reasonable use of the land will be impeded, without practical benefit to others, if the registered charge or interest is not modified or cancelled;

(c) the persons who are or have been entitled to the benefit of the registered charge or interest have expressly or impliedly agreed to it being modified or cancelled;

(d) modification or cancellation will not injure the person entitled to the benefit of the registered charge or interest; or

(e) the registered instrument is invalid, unenforceable or has expired, and its registration should be cancelled.

(3) The court may make the order subject to payment by the applicant of compensation to a person suffering damage in consequence of it; but no compensation is payable solely for an advantage accruing by the order to the owner of the land burdened by the registered instrument.

(4) The court shall, as it believes advisable and before making an order under subsection (2) direct

(a) inquiries to a municipality or other public authority; and

(b) notices, by way of advertisement or otherwise, to the persons who appear entitled to the benefit of the charge or interest to be modified or cancelled.

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