Simon's Megalomaniacal Legal Resources

Real Property - Covenants Run With the Land

. Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp.

In Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. (SCC, 2020) the Supreme Court of Canada considers the real property principle of covenants running with the land (ie. covenants are binding through a change in ownership):

[17] I begin by discussing the jurisprudence on when covenants may run with the land, which, despite having been memorably described as an “unspeakable quagmire”, can be summarized succinctly for the purposes of this appeal as establishing a general rule that positive covenants do not run with the land: E. Rabin, Fundamentals of Modern Real Property Law (1974), at p. 489. I then address the distinction between property rights and contractual rights, after which I consider Strata Co.’s suggestion that applying the principles for pre-incorporation contracts to agreements affecting interests in land is novel and its assertion that there is a public policy interest which justifies curtailing the parties’ freedom to contract in regard to its interests in land.

[18] At common law, the burden of a covenant which either requires the performance of an obligation by a landowner (a positive covenant) or restricts a landowner’s use of the land (a restrictive covenant) is not enforceable against a subsequent purchaser: Rhone v. Stephens, [1994] 2 A.C. 310 (H.L.), at pp. 316-17. In equity, however, a restrictive covenant may be enforced against a subsequent purchaser who purchased the land with notice of the covenant: Tulk v. Moxhay (1848), 2 Ph. 774, 41 E.R. 1143 (Ch.), at pp. 1144-45; Austerberry v. Corporation of Oldham (1885), 29 Ch. D. 750 (C.A.), at pp. 773-74, per Cotton L.J.; Noble v. Alley, 1950 CanLII 13 (SCC), [1951] S.C.R. 64, at p. 69, per Rand J. Where positive covenants are concerned, the general rule is that they do not run with the land: Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, [2016] 1 S.C.R. 306, at para. 25; Parkinson v. Reid, 1966 CanLII 4 (SCC), [1966] S.C.R. 162, at p. 167.