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Review Your SQE 1 Practice Records

Examination Timing: 00H01M25S

Edward owns two shops in Willowbrook, a small inland village, which are on opposite sides of the street. He runs his bakery business from one and has always let the other one out, although he has now decided to sell it to a developer. He includes a covenant in the transfer to "not use the premises as a bakery." Thomas is a baker looking to purchase the shop from the developer to set up a business to rival Edward's but is unaware of the restrictive covenant. The title to the shop is unregistered and will remain so. Edward wishes to ensure that the restrictive covenant binds Thomas. 

Which of the following statements best describes the legal position?

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Your selected option: D

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The restrictive covenant is an equitable interest and should be registered as a Land Charge to ensure it binds Thomas. Restrictive covenants in freehold land are equitable interests. Under the Land Charges Act 1972, they must be registered as Class D(ii) Land Charges. If registered, all purchasers of the land are deemed to have notice of them, thus ensuring that the covenant binds subsequent purchasers, including Thomas. Local Land Charges typically concern matters between the landowner and the local authority and are not applicable here. 

Key Point: Restrictive covenants in freehold land are equitable interests and must be registered as Class D(ii) Land Charges under the Land Charges Act 1972. Proper registration ensures that these covenants bind future purchasers of the land.

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