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The most common grounds for the Lands Tribunal agreeing to discharge or modify the restriction are that the restriction is obsolete due to the change in the nature of the neighbourhood since the time it was originally imposed, or that the restriction prevents the reasonable use of the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.
Hi Libby
Many thanks for your comment. In order to present you with bespoke advice, I will need to see the covenant along with title documentation.
However, the courts do tend to lean towards the view that letting a property would be classed as business activity and therefore a holiday let may be in breach of the covenant. Until we have further information, however, I cannot guarantee this is the likely scenario here.
If you would like us to review the covenant and title documents, please do let me know at kerry.southworth@harrison-drury.com
Kind Regards,
Kerry
I am looking for a bit of advice with regards to a covenant on our property if you are able please,
When we were moving in we asked about a covenant restricting us from keeping a caravan on the property and at the time we were told by the solicitor that it should be ok as long as it is not in anybody’s way, well it has taken us two years to buy one and I have bought a shell to outfit how we would like it, prior to buying and bringing it home I contacted the builders who own the covenants to enquire about the covenant (mainly because we have a neighbour who would oppose even though it doesn’t affect him at all), the gentleman got back to me with the following message:
“Thank you for the email and pictures.
Yes, it is confusing but Springfir bought the land so appear as the original owner but Springfir had ceased trading a few years earlier and were bought out by Persimmon who completed the development.
You will be pleased to hear that the covenant to which you refer is no longer applicable. The restrictive covenants under Section 5 are there to protect the builders interests whilst we have properties still for sale or are preparing the development for adoption. As it is now fully inhabited and adopted (bar the small Public Open Space) we no longer have any commercial interest in the development.”
The neighbours either side and behind me have no problem with the caravan, but this one who lives two doors away is quoting the covenant at me and threatening legal action against me even though I have it in writing from the owners of the covenant (the builders) that it is ok to do so!
What I would like to know is, whether or not he can still get the covenant enforced (even though Persimmon have waived it), and whether he can cause me any more hassle along these lines?
Many thanks
Damien.
Dear Mr Hopkins
Thank you for your email.
I understand that you are in the process of trying to sell your property, but are experiencing difficulties as a result of a restrictive covenant which provides that the property can only be purchased by individuals living or working in Keswick. Please note that whilst the title deeds to your property may contain a restrictive covenant, the restrictive covenant may not in fact be enforceable.
The law in respect of restrictive covenants is complex and before being in a position to provide you with advice in relation to the covenant, we would need to undertake a review of all relevant documentation including the title to your property and apply the information gleaned from this review to the appropriate legal provisions to determine who has the benefit of the covenant and whether the same is still enforceable. Our findings would be presented in the form of a written report to you, which would set out our advice on the covenant and identify a strategy to achieve your objectives moving forward on the basis of that advice. The report would also set out the likely costs you may incur in achieving your objectives, which would enable you to make an informed decision about the strategy to be adopted whilst keeping legal spend within agreed boundaries.
The cost of preparing this report will be a fixed fee of £750 plus VAT. We estimate that we could provide this in around 14 days of receiving such documentation.
If you would like us to prepare a report as above, we would be grateful if you could complete the attached contact sheet and provide any further relevant documentation, which should include the following:
• All relevant title documents; and
• Any other relevant documentation you hold.
As is our usual practice when taking instructions from new clients, we would also require payment of our fees on account before work is commenced on the file. We will forward our bank details to you should you confirm that we are instructed to prepare the report for you.
If you would like to discuss the matter in further detail or if you have any further queries, please do not hesitate to contact me on rabia.bapu@harrison-drury.com.
Kind regards
Rabia
We have an excouncil house in Keswick with a covenant stating only people working or living in Keswick can purchase it, we have had lots of interest in this property but all are from outside the area can this covenant be overturned.
Three years ago I bought my residential house with a large garden to the side (end of a cul-de-sac). I then decided to apply for planning, to build a three bedroom detached house on the land to the side of the property. When I purchased the property it had two separate title deeds.
1) The land the house sat on
2) The land to the side of the house (where the new dwelling will be)
Planning permission and building regulations were granted by the local authority. I started the build last November and now it’s up to damp proof course. Super structure will commence August this year.
Where the house is being built there were two semi-detached properties, but these got knocked down in the 1950’s due to a road being built at the back.
There is a covenant on the title deed that states there can’t be more than 18 houses on the street, this additional house would make it 17, I got a solicitor on board back in June15. The solicitor advised I took the insurance out anyway to mitigate any future risk. The covenant was set in 1930s so the chances of someone coming out the woodwork is slim. I asked my solicitor if there was anything else on the deeds that I should insure, she advised no.
Once the house was up to damp proof course, the council discovered and advised there was a covenant on the title deed that states the land can only be used as garden space. I had been granted planning permission and equally started the build. They have told me they will be charging a fee to take off the garden space covenant. I asked the reason for this and they mentioned I got the land too cheap and not at planning permission value. Advising they want a cut of the profit. Their calculation is;
their final value of the property – £140K
The council want 50% of 1/3 of £140K, then deduct the original cost price of the land £2.2K – £21.1K.
I bought the house three years ago off a couple who purchased the land off the council 8 years earlier for £2.2K.
I bought the house for £110K, noting that another house sold in a similar time period for £100K with no garden space. Therefore my argument is the purchase price of the garden is the increased, but net realisable value of £10K. I believe my predecessor had appreciated gains on the land so I shouldn’t be penalised for this.
Paying £21.1K to the council will wipe out half of the profits of the build, if I was advised at the application stage I wouldn’t have gone ahead, but because I’ve already spent £20K I have to proceed.
1) Do I have any legal ground with my solicitor not advising me to insure the covenant of the garden space
2) Do I have any legal ground to negotiate against the local authority.
3) Fortunately just after I got planning permission granted by the local authority I got in contact with a reputable estate agent to estimate a value to sell the land with the planning permission. I still have the letter headed paper from them advising £25K. Again, another argument is, if the land is worth £25K, I technically purchased the land for £10K (in my £110K house purchase) and up to date had spent £8K on the planning (council planning fees were £5.5K alone).
Consequently, the split should be from the estate agents value of £25K and my purchase price of £18K.
£7K would then be assessed.
Any advice would be greatly appreciated
I live in a Barn conversion, 5 barns in the complex , The Farmer selling the Barns 20 years ago 1996 sold them for cash, but asked the new owners to delay registration because he was going to get hit for capital gains tax. All the barn owners agreed because of the amazing location so I am told. The barn I bought back in 2007 ended up being registered in Jan 1997 as the previous owner ran out of money and had to get it registered to raise a mortgage. So in 1997
Mutual covenants were written between the Barns, however the Farmer put his name to the deed even though the other barns were claiming to be owners in planning applications and had passed over the money and spent huge amounts converting. The barn to my right was the next to register 6 years after they bought it and converted, and the barn behind was finally registered 11 years after they bought it. After the husband died and the wife found out it had not been registered.
These covenants have been causing me problems because of my privacy beeing lost,
It is my belief that you can not write covenants on land you don’t own, The Farmer was the name on the register but clearly, (and I have very strong evidence)did not own the barns.
Can I challenge the validity of the covenants ?
Dear Janis
Many thanks for your query. Before I am able to give any substantial advice, I would need to see a copy of any documentation which refers to the right to use the pathway.
It would seem from your description that the right is an easement, though more information such as your neighbours’ actual exercise of the right, the frequency and duration of this exercise would need to be explored.
If you would like to discuss this further, please do not hesitate to contact me on kerry.southworth@harrison-drury.com
Kind Regards,
Kerry
I live in a semidetached town house but the garage of a detached town house joins my property. It is in a residential area and the people who bought the detached town house are turning it into a childrens care home with 24hr care cover and would be running it as a business in a residential area. They are converting the garage into a study/training room losing a parking space and encouraging numerous people and traffic. The care home has already been approved by the council. None of the residents were made aware of this in the first place. Residents are rejecting the garage at present. I can send you a copy of the restrictive covenant clauses. Advice please.
Many Thanks
Hello,
I am applying for planning permission to build a new dwelling in the garden of my property.
One of the neighbours has told me they thought there was a covenant in the deeds restricting this.
Before I bought the property, the previous buyer (who subsequently pulled out) was advised by their solicitor that there was a restrictive covenant in place that would stop building. They then contacted the beneficiary of the covenant (a government department) requesting a quote for release; such a quote was provided and that buyer decided not to continue with purchase of the property.
My solicitors told me that they could not find a covenant restricting the build of a new dwelling; there is a covenant which at first sight would seem to, but in their opinion it relates to the current building and not to the land.
The covenant states:-
“The purchaser hereby jointly and severally covenant with the vendor to the intent that the burden of this covenant may run with and bind the property and every part thereof into whosesoever hands the same may come and to the intent that the benefit thereof may be annexed to and run with the retained land and the orange land and the yellow land and every part thereof as follows:-
i) …..
ii) Not without the prior consent in writing of the vendor to use the buildings for the time being forming part of the property for any purpose other than that of a single private dwellinghouse in one occupation only And in particular but without prejudice to the generality of the foregoing not without such consent as aforesaid to allow such buildings to be used for any trade or business or professional purpose whatsoever”
Assuming I gain planning permission, how should I proceed with this matter? Insurers will not insure until I have gained planning permission; however, I think I really need to know if the covenant does indeed restrict me from building a new dwelling in the garden. I don’t see why I should pay for permission from the supposed beneficiary (said government department), or pay for insurance, if this covenant does not actually stop me from building.
Thanks for any advice you can give.
Regards
Martin
Hello
I`m trying to understand the following which is on my title deeds.
On one deed is my house on the other is my back garden . This is the information on the back garden deed/title
1 A Conveyance dated 10 August 1920 made between (1) XXXXX
and others (2) XXXXX (3) XXXXX (4) XXXXX (5) XXX XXX and
others and (6) XXXX and XXXX contains restrictive covenants but neither the original deed nor a certified copy or examined abstract thereof was produced on first registration.
2 A Conveyance of the land in this title dated 29 November 1991 made
between (1) @@@@@@ Limited (Vendor) and (2) XXXX and XXXX
(Purchasers) contains the following covenants:-
“THE Purchasers HEREBY JOINTLY AND SEVERALLY COVENANT for the benefit and protection of the Vendor’s retained land not to do anything on the property hereby conveyed which would become or cause a nuisance or annoyance to the Vendor or the owner occupiers of the Vendor’s retained land.”
The company 2. @@@@@@ limited has gone bust and been liquidated in 2004 .
Would 2 still apply ?
Do I need to do anything ?
Many thanks