The law of restrictive covenants is a complex area and a mystery to many landowners, some of whom believe that restrictive covenants cannot be challenged, however, this is not the case.
Restrictive covenants affecting land arise out of an agreement that one party will restrict the use of its land in some way for the benefit of another’s land. The restrictive covenant is capable of being enforceable by one party’s successors in title against the other’s successors in title, as well as between the original contracting parties. Therefore, if your property is subject to a restrictive covenant and you wish to modify or develop it, you may discover that you are prevented from doing so if the covenant remains on the title.
Checking the title deeds to your property will quickly reveal whether there is a valid restrictive covenant which affects the land. If you find that your property is affected by a restrictive covenant, you should firstly consider whether indemnity insurance is available in order to provide you with protection in the event that someone with the benefit of the covenant takes legal action against you for breaching the covenant. If insurance is not available then you should try and identify the owners of the land which benefits from the covenant and try to reach a compromise with them which will usually involve the payment of money for the release of the covenant. If neither of the above are possible, then an application can be made to the Lands Tribunal seeking an order, which wholly or partially discharges or modifies the restriction.
The most common grounds for the Lands Tribunal agreeing to discharge or modify the restriction are that the restriction is obsolete due to the change in the nature of the neighbourhood since the time it was originally imposed, or that the restriction prevents the reasonable use of the property and modification would not result in those entitled to the benefit of the covenant losing something which provided a practical benefit of substantial value, and, money would be an adequate compensation for any loss suffered.
An application to the Lands Tribunal is a lengthy process sometimes taking in excess of 2 years and can prove to be very costly. Also, the result of an application to the Lands Tribunal is by no means certain, there is a great deal of discretion given to the Lands Tribunal to assess what they believe to be a practical benefit of substantial value.
An applicant will need to instruct an expert to report on whether the person entitled to the covenant would loose any practical benefit of substantial value. It is the expert’s responsibility to calculate any decrease in value which the proposed development might have on the land entitled to the benefit of the restrictive covenant.
Communication and negotiation are key in these situations, it is important to approach those with the benefit of the covenant and try to reach some sort of compromise. Providing them with a copy of the expert report is a good starting point. This may reassure the objector that they have nothing to fear in loosing the benefit of the covenant. If a compromise cannot be reached in the early stages and an application to the Lands Tribunal is made, negotiations between parties can continue right up to the final moments. Trial should be the absolute last resort for all parties concerned.
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 is also left to the Lands Tribunal to decide who pays the costs of the proceedings, more often than not the applicant will usually end up paying the costs of those who benefit from the covenant, whatever the outcome.
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 £1,000.00 – £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.
Dear Maggie
Many thanks for your comment.
Unfortunately I am unable to advise on the enforceability of the covenants without reviewing the title deeds of the respective properties.
Assuming the covenants are valid and enforceable and both parties are in agreement, it should be possible to discharge them. If both parties are willing to agree to remove the restrictive covenants, this may be a cheaper method than, for example, making an application to the Lands Tribunal.
However there may be some costs that you would have to incur. For example if either piece of land has a mortgage over it, the consent of the lender may be required before you are able to release the covenant. It is possible that the lender may request that their costs are paid before they agree to the provision of consent.
Ultimately I would need to review the covenants and any correspondence you have had with the other land owner before giving you an accurate estimate of the costs involved.
Please do not hesitate to contact me on 01772 429 207 or jack.stephenson@harrison-drury.com if you wish to discuss this further.
Kind Regards
Jack Stephenson
My property is a large manor house that was split into 2. We bought one half of it from the vendor who lived in the other half. We have a restrictive covenant on us from the vendor saying “shall not be used for any trade or business whatever”. This vendor has now sold on and there are new people living in the other half of the house on which we also have a restrictive covenant stating a) “not to erect or permit to be erected on any part of the Transferors retained or adjoining land any building other than a private dwelling house” and b) ” to use the private dwelling as a private dwelling house only for use as a single household”.. Our new neighbours are now running a (currently) small business from the property doing craft classes and demonstrations and are marketing the property as a venue suitable for meetings and event and they have also built a number of sheds on the adjoining land from where they hold some of the classes. If we wanted to and were both in agreement to lift the covenants we hold on each other is this possible and is it costly.
Many thanks
Kind Regards
Maggie Lynch
We live in a small barn conversion complex of three houses sharing a very modest car parking area. Our neighbours have just moved and told us that their four bedroom house is now going to be holiday let. Obviously we are very upset because of the proximity of the house to our own and parking issues.We have checked our deeds and there is a restrictive covenant with the Land Registry saying that the three houses can be used for dwelling only and not used for any business purposes. What can we do??
A restrictive covenant on our property stating no caravans, house on wheels, sheds, for the purpose of sleeping has been sent to us by the next door neighbours, wanting us to move our motor home parked in the garden. However the construction company who built the house in 1977 has been dissolved. Would this invalidate the covenant?
Dear Jan
Thank you for your comment.
Unfortunately, before I am able to provide any advice I would need to review your title deeds to determine whether the covenant is enforceable and who has the benefit of it.
If the covenant is enforceable and your neighbour does indeed have the benefit of it, ways of dealing with the covenant could include negotiating a release with the neighbour, obtaining indemnity insurance to protect against the covenant being enforced or making an application to the Lands Tribunal to have the covenant modified or discharged.
If you have already spoken with your neighbour about the covenant, unfortunately the second of these three options may no longer be available.
I would be more than happy to provide guidance as to which of the other options would be more suitable, however I would need to review the title deeds along with any correspondence you have had with your neighbour.
If you have any questions, please do not hesitate to contact me on 01772 429 207 or jack.stephenson@harrison-drury.com.
Kind Regards
Jack Stephenson
Dear Christopher,
Thank you for your query.
Firstly, the enforceability of the restrictive covenant depends on its wording, as well as various other factors. It is possible to seek a declaration from the Court as to whether a restrictive covenant is enforceable and by whom.
Secondly, a restrictive covenant may be removed or modified by the Upper Tribunal if it is obsolete, it prevents some reasonable use of the land, the beneficiaries of the covenant agree, or no injury will be caused.
Finally, insurance may be available in relation to future breaches of the restrictive covenant.
We would be happy to discuss the above options with you, but we would need to see a copy of the restrictive covenant in question as well as find out more about the property and your business to advise you fully, as every case is different.
You should also be aware that changing the use of a property may require planning permission, which is a separate control from any restrictive covenants.
If you would like to discuss this matter further, please do not hesitate to contact me on 01772 429210 or robert.burn@harrison-drury.com.
Kind regards,
Robert Burn
I bought my house 2 years ago and it has a restrictive covenant which prohibits business use. I am a contractor with a limited company (registered at my accountants address). I work from home about 1-2 days per week (internet, admin based work). My mortgage company wouldn’t allow me to put my trading address as my home address when I bought the property (I use my parents address as a trading address instead). Where do I stand in just ignoring the covenant? It was put in place in the the 1970s when the internet didn’t exist.
I am having half of my mother’s garden (bottom)transferred into my name. We have been granted full planning permission to have a 2 bedroom bungalow built on it. When we went to see our solicitor, she pointed out the adjoining property and the house built in next doors garden have the benifit of a covenant. It says – not to erect any buildings or any other erections on the property hereby conveyed except in accordance with plans elevations and specifications showing materials external finish and location previously approved in writing by the vendor ( such approval not to be unreasonably witheld)
I felt I had to make the neighbour in the house built in next doors garden aware of this covenant ( he did not know)to avoid any problems should we wish to sell in the future.
This neighbour now is withholding his approval. He first said the buaglow would take away his privacy and cast shadows on his garden. We offered to move the bungalow forward but he said it would cast shadow on his patio and dining room. He has said if we move it level with his house on the building line he may approve but our architect says it won’t work because it will be less than 22 meters from my mother’s houes which will it will be facing. We have now offered to move it as far forward as the planners will allow and reduce the height and have a hipped roof which our architect says will dramatically reduce any visual impact and shadows.
The view he has of my mother’s garden now is a large derelict shed and the mobile home park which adjoins my mother’s property. I have pointed out the new bungalow with landscaped gardens will be a much better view but he is still being very difficult.
If I offer him payment I will have to pay the other neighbour and the bungalow just won’t be worth doing. I am at a loss to know what to do next. Is he being unreasonable?
I would very much appreciate your comments.
Thankyou
We live on a small freehold ‘estate’ (28 terraced houses) that were built in 1983. At the same time a private limited company was established to maintain the common areas. There are restrictive covenants attached to each title. Freeholders by deed were to covenant with the original Vendor, Company and other freeholders to observe such covenants.
It appears in the transfer between the Vendor and Purchaser states that ‘for the benefit and protection of the 28 houses’ ‘and so as to bind the property into whosesoever hands the same may come acquired within the next 21 years’… The same paragraph then goes on to mention the covenants with x,y and z and observation of covenants.
Is there the possibility that there is a time limit imposed on these covenants? If so, what happens to expired covenants, and what would happen to the Company given the covenants include freeholders paying subscriptions to the Company?
Many thanks,
Alistair
Dear Sofia
Thank you for your comment.
The first thing to establish is whether the restrictive covenant you refer to is enforceable. A restrictive covenant would generally remain enforceable by the owners of the land who benefit from the covenant, provided it has not been extinguished or released. Unfortunately, without further information, I am unable to comment specifically on the enforceability of the covenant in question.
In general terms, if the covenant is found to be enforceable, there are a number of different ways you can look to secure your release from the restriction. This would then enable you to construct a fence on your property as you wish. Your options include:-
1. Negotiating with the benefiting land owner to secure the release from the obligations under the covenant;
2. Obtaining restrictive covenant indemnity insurance to protect against the risk of the covenants being enforced; or
3. The submission of an application to the Lands Tribunal to have the covenant modified or discharged.
If you would like to discuss your case further or if we can of further assistance, please do not hesitate to contact us on 01772 258321.
Kind regards
Beccy Patience