Building schemes

In Elliston v Reacher ([1908] 2 Ch 665, CA (Eng)) a building society bought land. A deed was prepared in which the building society and the purchasers were said to covenant with each other not to use any plot of land on the estate as a hotel (unless the building society’s consent was obtained). This was stamped but was not executed by the building society or any of the purchasers. The sales materials for the first sale of the plots identified the estate and the plots to be sold and stated that each purchaser would covenant with every other to observe the restriction on building a hotel without consent. The first conveyance of each plot expressed an intention that the purchaser and his successors in title would be bound by the restrictions in the deed of covenant. It identified the plot and the estate. It was held that this created an effective building scheme so that the restriction against building a hotel could be enforced by a successor in title against a successor in title. Every lot was purchased subject to the understanding that it had the benefit and burden of the restrictions.


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