Property Lawyers – Restrictive Covenant Specialists
When you buy a house, your conveyancing lawyer will give you a copy of the legal title before you exchange contracts. This may include restrictive covenants. We look at what this will mean for you as the property owner and answer the question, “Should I buy a house with a restrictive covenant?”
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Buying a house or flat – what is a restrictive covenant?
When it comes to a house or flat, a restrictive covenant is a condition noted on the title to a property that prohibits the owner from carrying out certain actions. (A restrictive covenant in a contract of employment is an entirely different thing).
Properties are often subject to restrictive covenants, no matter how old they are. New properties will usually have a long list of restrictions. The covenants generally exist to try and make living in the property, and neighbouring properties, more pleasant. For example, with new build homes, owners could be restricted from parking caravans in front of their houses. This means that no-one has to look out of their window at a caravan.
Other common examples of restrictive covenants include:
· No building or planting forward of the build line of a house
· You cannot add new buildings to the grounds
· You cannot use the property as a business
· You cannot keep livestock at the property
· The front garden must not be allowed to become unkempt
· Height restrictions on any additions to the property
If you buy a leasehold property, the lease will almost certainly include restrictive covenants. The same covenants will bind all leaseholders. For example, the lease could ban pets at the property. This means that if someone has a pet in their flat, the other leaseholders can ask the freeholder to enforce the restrictive covenant and remove the pet.
Restrictive covenants in a lease can be in addition to other more general restrictive covenants in the freehold title, which will also bind the leaseholders.
Who is bound by a restrictive covenant?
Restrictive covenants generally bind any purchaser of the property as they ‘run with the land’ and do not just affect one owner. If you become the owner, you will be required to adhere to all of the covenants listed in the property’s title and so will any future purchasers.
To be enforceable, a restrictive covenant must comply with the following:
· It benefits the legal owner of other land, such as neighbouring property. The law refers to this as a restrictive covenant ‘touching and concerning’ the neighbouring or other land
· The property bound by the restrictive covenant is identifiable
· The person bound by the restrictive covenant is aware of it. For example, it will normally be noted on the registered title of the property, meaning that a new owner cannot say they did not know about it
· There is an intention that the restrictive covenant will remain enforceable. The wording of the restrictive covenant will usually infer this, but it can be debatable and court cases often look at whether this intention exists
· The covenant must be restrictive. That means it is not a positive covenant, as positive covenants are not usually enforceable against future owners of property unless the future owner agrees to be bound by them
Should I buy a house with a restrictive covenant?
That really depends on the property, the nature of the covenant and your personal circumstances and plans. Restrictive covenants are very common. Your conveyancing solicitor will advise you of all the covenants that apply to the property and draw your attention to any unusual points. They will also ask the seller whether they know of any breach of the restrictive covenants.
If a restrictive covenant requires written confirmation from the person with the benefit of the covenant for any alterations or additions to the property, your lawyer will ask the seller to provide this where relevant.
You should go through the covenants in detail yourself and check for any breaches. You also need to consider whether the restrictions will affect your plans for the property. So, for example, if you want to add an extension, you should look at whether the restrictive covenants permit this.
If you are taking out a mortgage, your lender will want to approve the restrictive covenants. They may object to more unusual or onerous covenants, but they are usually happy with ordinary restrictions such as not using a property as a place of business or not making alterations without permission.
You can discuss the restrictive covenants with your property lawyer if you have any concerns. They will be able to tell you whether the covenants are normal or whether they could cause problems in the future.
Most properties have at least some restrictive covenants. Provided you understand the implications for your particular circumstances and your lender no objection, it is not usually a problem to buy a house with restrictions on the title.
Who has the benefit of restrictive covenants?
A restrictive covenant usually arises from a transfer of land. The covenant is set out in the transfer document, and the party selling the land has the benefit of it and the right to enforce it.
This can cause problems over time, as it may be difficult to identify the individual or company that benefits from the covenant.
What happens if the seller has breached a restrictive covenant?
If the seller has breached a restrictive covenant, it may be possible to remedy this. For example, your conveyancer could ask the seller’s lawyers to obtain retrospective consent to any extension to the property or other alteration.
Without this, there is a risk that the person who benefits from the restrictive covenant could take steps to enforce it in the future. This could include requiring you, as the property owner, to remove an extension or have work done to restore the property to its original condition.
Even if you are prepared to take this risk, your mortgage lender is unlikely to agree to your loan with that kind of condition hanging overview, unless indemnity insurance is in place. Your lawyer can ask the seller to arrange and to pay for insurance. It will provide cover so that a payment is made if the individual with the benefit of the covenant enforces it.
This is a common option when the person with the benefit of the restrictive covenant cannot be identified.
(It’s worth noting that although taking out an indemnity policy would potentially cover your future costs, if someone looks to enforce the covenant, it won’t stop them actually enforcing that covenant).
When I buy a house, can I get rid of a restrictive covenant?
It may be possible to remove a restrictive covenant. However, this will take time and is not usually an option before a purchase. What’s more, they’re almost certainly won’t be a guarantee that you can successfully remove that condition.
If you can identify the person benefitting from the restrictive covenant, you can ask them if they will release it. They are likely to require payment for this as well as confirmation that you will pay their reasonable legal costs. Your lawyer will draft a deed of release for them to sign and then arrange for the removal of the restrictive covenant from the legal title held at the Land Registry.
Where it is not possible to identify the beneficiary, you can ask the Upper Tribunal (Lands Chamber) to remove or modify the restrictive covenant if it is unreasonable or cannot be enforced. The Upper Tribunal is a specialist court that deals with property matters.
If the court agrees to remove the covenant, you will usually be required to pay a premium to the person with the benefit of the covenant.
This is a complex area of law and it is important to take advice from a property lawyers with expertise in dealing with restrictive covenants if you are considering applying for removal. You should not breach a restrictive covenant in the hope that the court will subsequently remove it. Developers have tried this tactic and on occasion they have had to demolish a development.
