Challenging and enforcing restrictive covenants
A restrictive covenant affecting freehold land usually restricts the use of its land in some way for the benefit of another’s land.
There are generally two types of covenant affecting land. A positive covenant, generally, imposes an obligation to carry out some positive action in relation to land or requires expenditure of money. In contrast, a restrictive covenant restricts the use and enjoyment of the land.
The distinction between restrictive or negative covenants and positive ones is important. That’s because the burden (the obligation to observe a covenant) does not generally bind successors in title where a covenant is positive in nature, but it may do so if the covenant is negative.
How are restrictive covenants used?
There are a number of ways that restrictive covenants may be used. These include:
- Limiting possible uses of the land, for example, to residential purposes only
- Prohibiting particular trades or businesses
- Forbidding undesirable activities or potential nuisances
- Restricting the number or type of buildings that can be erected
- Restricting the height of buildings
Examples of positive covenants on the other hand may include those requiring:
- Expenditure of money
- Works of repair or maintenance
- Erection of buildings or boundary fences
- Payment of further money on planning consent being granted
The meaning and effect of a covenant must be carefully considered to see if it is genuinely negative in nature as many covenants can be found expressed in ambiguous terms.
When is a restrictive covenant not enforceable?
A restrictive covenant will generally be enforceable between the original contracting parties as a matter of contract. There can be situations where this is not so, for example, where:
- The covenant is too uncertain or ambiguous to be capable of enforcement
- The covenant is prohibited by competition law and is unenforceable
- The covenant is contrary to public policy, for example, it contravenes equality laws
- The covenantee assigned the benefit of the covenant to a third party
Where the person seeking to enforce the covenant and the owner of the burdened land are successors in title to the original contracting parties, there are several pre-conditions that must be met for the covenant to be enforceable.
When is a restrictive covenant enforceable between successors in title?
For the covenant to be enforceable between the successors in title to the original parties the following rules for the passing of the benefit and the burden of the restrictive covenant must be complied with:
- The covenant benefits land owned by the person seeking to enforce it
The covenant must “touch and concern” or relate to the land owned by the person seeking to enforce the covenant. It must affect the land and not merely be of personal benefit to the original contracting party. A covenant is deemed to touch and concern land where all of the following apply:
- The covenant benefits only the owner for the time being of the land and if separated from the land ceases to be of benefit.
- The covenant affects the nature; quality; mode of user; or value of the land
- The covenant is not expressed to be personal
The covenant must actually benefit or preserve the value of the land. The courts assume that a covenant is capable of benefiting particular land for which the covenant was imposed unless it can be proved otherwise.
- The person seeking to enforce the covenant owns the benefiting land
The person seeking to enforce the covenant must either be the legal owner or a person with some lesser interest that is recognised in equity. For example:
- A person who has contracted to buy the freehold
- A beneficiary under a will
- A trustee in bankruptcy
- The benefit of the covenant has passed to the person seeking to enforce it
The benefit can pass in one of three ways:
- Annexation
- Assignment
- Scheme of development
It is also important to consider the application of Competition Act 1998 and Land Agreements Exclusion Order as certain restrictive covenants are prohibited and will be unenforceable.
Although the benefit of a restrictive covenant can pass at common law, the burden of a restrictive covenant cannot. However, the law of equity developed to allow the burden of a restrictive covenant to be enforceable against successors in title in certain circumstances.
How do I challenge a restrictive covenant?
There are a number of ways of challenging a restrictive covenant.
Express release: It may be possible to negotiate the release or variation of a restrictive covenant.
Indemnity insurance: It is possible to obtain indemnity insurance to protect against the risk of a person with the benefit of a restrictive covenant seeking to enforce it. Usually, the cover is for an indefinite period, at a one-off premium and also covers successors in title and mortgagees of the policy holder. However, if there is a proposed change of use or planning application it may not be possible to obtain cover for the new use/development until the consent has been granted and no objections relating to the restrictive covenant have been raised.
Upper Tribunal (Lands Chamber): If agreement cannot be reached with the beneficiaries of a restrictive covenant, or if insurance is not available, an application can be made to the Upper Tribunal (Lands Chamber), formally the Lands Tribunal, for the modification or discharge of a restrictive covenant. An application to the Upper Tribunal is often a lengthy and costly process. If no objections are raised, an application can take three months but much longer in a disputed case. The Upper Tribunal has power to order the applicant to pay compensation to the person entitled to the benefit of the covenant. The Upper Tribunal can discharge or modify the restriction if satisfied that one of the following grounds applies:
- The covenant is obsolete
- The covenant impedes some reasonable use of the land
- The beneficiaries expressly or impliedly agreed
- No injury will be caused by the modification/discharge
Applications/releases pursuant to statute: It may be possible to utilise the provisions of the Housing Act 1985 or the Competition Act 1998.
Civil Procedure Rules (CPR): In challenging the covenant there is also the option of court proceedings under section 8 of the CPR for declaratory relief, although most parties will go through the Lands Tribunal process.
As always it’s important to seek specialist legal advice at the earliest opportunity to best protect your interests.
Restrictive Covenant Report
If you have a restrictive covenant which may affect your freehold land, our property litigation team can consider your circumstances, by way of written report. The written report will set out our advice and identify a strategy to achieve your objectives moving forward on the basis of our advice.
Our report will consider all the circumstances giving rise to your query, undertake a full review of all relevant documentation and apply the information gleaned from this review to the appropriate legal provisions. We estimate our fees to prepare our Restrictive Covenant Report will be in the region of £1,000 – £1,500 plus VAT and disbursements. Please be aware that cost estimates are provided to give you an idea of the likely costs involved only and costs will vary depending upon the level of papers and complexity involved.
For more information on our Restrictive Covenant Report, please contact a member of our team on 01772 258321.
We live next door to a property that had just been demolished for development of three new houses. Not something we’re happy about, as they are building much further back than our property and at two storey level where originally it was only one. Unfortunately planning has been granted (we did object originally as did many others), so thought it was pretty much out of our control, however we’ve just been made aware of a restrictive covenant on their deeds that was put in place in 1974. It states….Neither the Purchaser nor their successor in title shall be or become entitled by right or privilege by way of easement or otherwise in respect of any right of light or air or otherwise which might in any way prevent restrict or interfere with the free use development or enjoyment of the adjoining or neighbouring land which may now or formerly or in the future belong to the vendors.
We hava a link detached house with a restrictive covenant which is the same with every other house on the estate. I would like to enforce that covenant on my next door neighbour to stop him building an extension in between our houses in place of a link garage attached to both houses. The restrictive covenant says that we can’t build/extend without the original builder’s -Vendor permission but the company doesn’t exist and there is no one to ask for the permission from which doesn’t mean it would be granted at all. This was set to keep the estate in it’s design and prevent from turning into terraced houses. The entire estate is made of around one hundred link detached houses of which just one has got a similar extension and it looks awful. Most residents keep the estate as it was build and id like to do the same. I know they have to serve me a party wall notice and I can reject it but surveyor might decide to allow the extension anyway with a tiny gap between houses anyway which changes nothing – it will still look like a tarraced house.
I feel that I’m the beneficiary of the restrictive covenant as it protects my interest and value of my house which was the intention of it being imposed in first place.
Have I got any chances with the injunction?
I sold the house next door with a covenant in place to stop anything being built next to it. The house I sold has been sold since will the covenant stand? The owners and or their family got pp to turn the house into 2 flats with an outdoor staircase on the land in question. Where do I stand now? How do I stop the staircase being built?
I have lived at my current address for 13 years and although the properties in the road are detached, I have outbuildings which are on the boundary line and are co-joined through extensions over the years to my neighbour. My neighbours have announced that they would like to sell to a developer to put 9 flats on the site, but there has been a covenant in place since 1925 when the houses were built, that the plots are only to be used for single occupancy dwellings and not multiple occupancy to prevent overdevelopment of the site. What are my chances of enforcing such a covenant in a David and Goliath situation against a large development company?
We have a covenant on our Freehold home that was set by the developers when purchased as new in 2003. The builders have since gone into liquidation and the freehold transferred to the road management company (private road). They are considered the successors.
The covenant states that we cannot erect any further building or erection of any description on the property without the written permission of the transferor
and
Not to alter the external appearance of the property without the written consent of the transferor.
We wish to add a small extension to the rear of our property (3x4m and single height). Do these covenants remain enforceable since that were for the benefit of the original builder and 17 years has passed by?
Our property is subject to a restrictive covenant held by our neighbour & it states that only a single dwelling to be built upon our property/land.
We believe, the current neighbour resides in the ‘original dwelling’ from which, decades ago, numerous parcels of land were sold off as single building plots all I imagine bound by the same covenant.
However, a year or two ago, the neighbour himself subdivided his own garden plot & has since had a second property built. We now wonder, if he has by his own actions lost the right to enforce the covenant…???
Several years ago he told us that he would never permit us to build a second residence on our own plot. If he could be persuaded to allow us to do so, the likelihood is that he would demand such a vast sum of money it would never be worth us proceeding with the build.
We’d really appreciate some advice & direction on this matter.
Thank You
In the following hypo, Grantor has 3 acres of land which divided 3 lots. Grantor conveys lot 1 to grantee 1 with a real covenant. Two years later, he conveys lot 3, which is not adjacent to lot 1 to grantee 2 and imposed the same real covenant as he did in the conveyance of lot 1. Grantor then sold lot 2 to grantee 3 without any real covenant. Grantee 1, then sell his lot to a successive buyer. If the buyer has notice of the real covenant, can grantee 2 enforce the real covenant against the buyer?
My understanding is that the only way grantee 2 can enforce it is by way of equitable servitude and not under the theory of real covenant.
We have purchased a modest 3 bed semi detached property built circa 1900. There is an attached garage built in the 1980s, and the owner at the time of building placed a restrictive covenant on the garage to the effect that it cannot be used for any other purpose. We wanted to extend the garage forward and use some of the existing rear to create a cloakroom and utility room. Our solicitor approached the individual involved on our behalf and he indicated he would agree to the lifting of the covenant for a sum of £12000. We expected some reasonable sum to be paid but this demand shocked us. Is there a precedent in this type of case? I should say the individual involved is not a neighbour and has no interests in properties or land surrounding our property.
Hi Carol
It is difficult to assess the sum requested by the individual without further information. Compensation resulting from the removal or modification of a restrictive covenant is based upon the reduction in value of the property that had the benefit of the restrictive covenant. It seems that you may have some arguments in this regard.
I’d be happy to receive some further details and provide you with advice on your position if you would like to telephone me on 01772 789 332 or contact me via email at jody.proudman@harrison-drury.com.
A minor restrictive covenant relating to property structure alterations/extensions seeks third party consent in writing.
If it was possible to track down the third party company for consent would this almost in every case require a fee to the company?
Or if the company ceased to exist or even operate under a different name at this current time would the covenant be unenforceable?
Hi Chris
This would very much depend upon the wording of the covenant itself. In some cases, it could be possible that a third party might be willing to provide consent without seeking any compensation in return, but this would require exploration (assuming that the covenant was enforceable).
I would be happy to look at this in more detail for you and if so, please contact me on 01772 789332 or at jody.proudman@harrison-drury.com.
We are finding it impossible to sell our property due to a restrictive covenant stating it cannot be used for business purposes the property has 25 acres of land and most prospective purchasers want to run a business we have now lost 3 potential sales the previous occupant ran a business unchallenged from the premises can this covenant be over turned?
Hi Anna
An application to modify or discharge a restrictive covenant can be made on the basis as set out in the article above. You will appreciate that each application turns on its own facts.
If you would like advice as to whether an application would be likely to succeed in your specific circumstances, please contact me on 01772 789 332 or jody.proudman@harrison-drury.com.