Briefing Note - Striking off Companies, Successors in Title and Covenants

The Law of Property Act lays down that when covenants are imposed on land, they will bind successors in title to the land in most cases. However, the interpretation of such covenants is not always clear cut. In a recent case - Crest Nicholson Residential (South) v McAllister - the Court of Appeal considered a situation where there was a covenant on land which required the consent of a company before development could take place - but the company had ceased to exist as it had been struck off the Register of Companies. The covenant also placed a restriction on the number of properties that could be built.

In a lengthy ruling, which looked carefully at the passing of the titles in land and covenants relating to them, the Court decided that as regards the permission to build, the covenant had become redundant with the dissolution of the company. Such a situation may be assimilated to a consent from a person who has died. As regards the number of units, the Court ruled that the covenant would have been enforceable by the landowner had it not been worded in the way it was, which rendered it unenforceable.