Elliston v Reacher  2 Ch 374
Property law – Restrictive covenant – Building scheme
Part of an estate which had been purchased by a society was proposed to be sold in numbered lots as per a sales plan, with the terms of sale attached to the plan. A plan was annexed to the indenture that was being prepared in line with the creation of a trust and this was identical to the sales plan. However, the restrictive covenants would only be applicable to those who signed the document. One of the restrictive covenants was that no hotel, tavern, pub or manufacturing plant could be built on any of the lots and a house on the lot could not be significantly modified without the consent of the vendor. One of the purchasers of the plots of land leased their property and the lessee used the property as a hotel. The plaintiff sought to challenge the use of the property as a hotel in line with the restrictive covenant previous agreed.
The court was required to establish whether the plaintiff could restrict the building and use of a hotel on the property in question. In doing so, the court had to consider whether the covenant had passed in law with the land through the different owners of the property.
The court held that there was a general building scheme based on the current facts. On this basis, both parties could rely on the benefit of the covenant and therefore, the plaintiff could rely on an injunction to prevent the building and use of a hotel on the property.
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