Restictive Covenants and Conveyancing
Many properties are subject to restrictive covenants. A restrictive covenant is a private agreement between land owners which may restrict the way land may be used and developed. It is a type of contractual arrangement that we often come accross in coveyancing.
In most cases, the nature of the covenant is consistent with the type of property being sold.
A covenant is basically a promise to do, or not do, something on or to the property. A restrictive covenant is just that, restrictive. Restrictive Covenants are often imposed by a land owner selling off land and who wish to retain some control over what happens with the land that has been sold.
A restrictive covenant is also known as an incumbrance that is attached to the land. It may have an expiry date or it may state that some of the covenants are not to expire and consequently, you should be aware of the effect it my have on your use of the property and on your conveyancing transaction.
The land owner can put whatever restrictive covenants they want on the land they are selling to you, but they have to be reasonable and capable of being adhered to.
Examples of Restrictive Covenants
The following are common examples of restrictive covenants:-
- Not to cause a nuisance to your neighbours
- Not to carry out any building or residential development
- Not to erect any building or structures on the land
- Not to use the land for any trade or business activity.
In such cases provided that they will not seriously impede the buyer's intended use of the property, no further action need be taken by the conveyancing solicitor other than informing the buyer of the extent of the covenants and telling him that he has a liability for breach of the restrictive covenants.
Instructions may reveal that the buyer's intended use of the property after completion will cause a breach of existing restrictive covenants. Unless it is clear that the covenants are invalid, it is safest to assume that they are enforceable and to consider whether it is possible for the conveyancing solicitor to obtain an indemnity policy which will cover liability for the future breach of covenant.
Restrictive Covenant Indemnity Insurance
Indemnity insurance is widely available at competitive premiums. The benefit of the policy can be passed to successors in title. If no policy can be obtained consideration might be given to one of the following solutions;
Obtain the consent of the person with the benefit of the restrictive covenants - this is rarely a viable option. If the restrictive covenants were imposed many years ago, it will be difficult to trace the person with the benefit. If the covenant has been imposed during the last 20-30 years or so, it may be possible to trace the person with the benefit, however, they may charge for the release or modification of the restrictive covenants.
Restrictive Covenants and The Lands Trubunal
The Lands Tribunal has power in certain circumstances, under Section 84 of the Law of Property Act 1925, to modify or discharge restrictive covenants where the original purpose of the covenant has over time become inappropriate.
Section 84 sets out a number of grounds for an application to the Lands Tribunal but the most commonly used is Section 84(1)(aa) which permits the Tribunal to act where the restrictive covenant impedes a reasonable use of land, provided that the covenant does not secure continuing practical benefits of substantial value or is contrary to the public interest, and where monetary compensation will be an adequate remedy. This solution may not be quick or cheap to pursue.
Catharine Crossley LL.B , LL.M (Conveyancing Warehouse)
Disclaimer: this is an introductory guide and is not a definitive source of legal information.
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