Restrictive Covenants
Discussion
I'm buying my first home and I've just finished reading through the results of the searches that the solicitor has done. There is a restrictive covenant which basically (and pretty unambiguously) says that the property can't be used for any business whatsoever.
Are these sorts of covenants common? i.e. could I have a search done on another property tomorrow and find just as easily that there is no such similar covenant? If I was to start operating a business from the property what would be the implications? As discreetly and considerately as possible of course, but it would be fairly obvious to anyone who paid any attention that there was a business working from the garage, i.e. sign-written van, the odd customer etc. Not particularly disruptive by any means, but obvious..
Who enforces these things? The council I suppose? What powers do they have? Force the business to stop operating from there? Shut it down? Eviction??
Will speak to my solicitor ASAP but that probably won't be until next week. Anything specific I should ask? Is there anything that can be done about getting the covenant removed? Anybody been in / experienced a similar situation?
It could be a deal-breaker for me
Are these sorts of covenants common? i.e. could I have a search done on another property tomorrow and find just as easily that there is no such similar covenant? If I was to start operating a business from the property what would be the implications? As discreetly and considerately as possible of course, but it would be fairly obvious to anyone who paid any attention that there was a business working from the garage, i.e. sign-written van, the odd customer etc. Not particularly disruptive by any means, but obvious..
Who enforces these things? The council I suppose? What powers do they have? Force the business to stop operating from there? Shut it down? Eviction??
Will speak to my solicitor ASAP but that probably won't be until next week. Anything specific I should ask? Is there anything that can be done about getting the covenant removed? Anybody been in / experienced a similar situation?
It could be a deal-breaker for me
One of my neighbours complained that I was running my business from home and sure enough, there is a restrictive covenant which prohibits this.
I spoke to the council and they said that it is no longer relevant as a lot of people work from home or use it as a business address.
It's different though if you have a regular stream of (business related) visitors or deliveries.
I would imagine that more than one or two company vehicles parked up outside would be a problem.
I spoke to the council and they said that it is no longer relevant as a lot of people work from home or use it as a business address.
It's different though if you have a regular stream of (business related) visitors or deliveries.
I would imagine that more than one or two company vehicles parked up outside would be a problem.
Some covenants are just plain daft, where others keep the area looking respectable. Caravans/motorhomes parked on the drive are not right. On the other hand I bought a house about 10 years ago that had a covenant preventing any kind of aerial on the property without planning permission because it's a conservation area. Why? Surely 99% of houses have aerials! Plus they just built 24 houses in that same conservation area!
fatboy b said:
Some covenants are just plain daft, where others keep the area looking respectable. Caravans/motorhomes parked on the drive are not right. On the other hand I bought a house about 10 years ago that had a covenant preventing any kind of aerial on the property without planning permission because it's a conservation area. Why? Surely 99% of houses have aerials! Plus they just built 24 houses in that same conservation area!
Mine is on a modern (10 year old) estate and prohibits vans, caravans, aerials etc. Plenty of sky boxes on the walls now. Likewise a few vans.Many of these covenants are just to keep the estate tidy whilst the developer sells them.
Restrictive covenants are usually intorduced in an attempt to keep the properties (all your neighbours will have the same) clean, tidy and the estate in a pleasent state. The business one for example is to stop people from say running a garage from their drive or a mini bus company all parked out he front. Using one room as an office won't be an issue. Firstly the covenant still have to be relevant, secondly someone has to complain to the person who put the covenant in, and thirdly they have to give a toss enough to do something about it. I wouldn't let it worry you.
Road2Ruin said:
Restrictive covenants are usually intorduced in an attempt to keep the properties (all your neighbours will have the same) clean, tidy and the estate in a pleasent state. The business one for example is to stop people from say running a garage from their drive or a mini bus company all parked out he front. Using one room as an office won't be an issue. Firstly the covenant still have to be relevant, secondly someone has to complain to the person who put the covenant in, and thirdly they have to give a toss enough to do something about it. I wouldn't let it worry you.
This 
I had the same type of covenant in my old house (1930s Laing estate in N London). The council do not enforce these - only the named beneficiary of the covenant and his successors can enforce them. In many cases, no-one knows who that is - especially when property developers have gone bust, been taken over, etc.
However, I did work from home - first as a self-employed journalist (desk and PC) and then running a small mail order business (out of two rooms). When I sold my house the buyers' solicitor wibbled about possible repercussions for the buyers. He may have been justifying his fees or excercising due diligence? (shrug)
In any case, I simply paid about £100 for an insurance policy that would cover me and the buyers from any losses should the beneficiaries of the covenant successfully sue for my breaking of the covenant.
FWIW, the covenants that you MUST look out for and avoid like the plague are those ancient ones involving a nearby church. These frequently contain clauses about having to share in the upkeep of the church. The beneficiary of those covenants (CoE, etc) are still going and have successfully gotten £thousands out of nearby homeowners who thought it was an old and unenforceable covenant.
However, I did work from home - first as a self-employed journalist (desk and PC) and then running a small mail order business (out of two rooms). When I sold my house the buyers' solicitor wibbled about possible repercussions for the buyers. He may have been justifying his fees or excercising due diligence? (shrug)
In any case, I simply paid about £100 for an insurance policy that would cover me and the buyers from any losses should the beneficiaries of the covenant successfully sue for my breaking of the covenant.
FWIW, the covenants that you MUST look out for and avoid like the plague are those ancient ones involving a nearby church. These frequently contain clauses about having to share in the upkeep of the church. The beneficiary of those covenants (CoE, etc) are still going and have successfully gotten £thousands out of nearby homeowners who thought it was an old and unenforceable covenant.
55allgold said:
FWIW, the covenants that you MUST look out for and avoid like the plague are those ancient ones involving a nearby church. These frequently contain clauses about having to share in the upkeep of the church. The beneficiary of those covenants (CoE, etc) are still going and have successfully gotten £thousands out of nearby homeowners who thought it was an old and unenforceable covenant.
You're talking about chancel liability (soon to become obsolete), these won't show in the covenants as they are not covenants. Usually the only way to find out about these is by going to the local church and looking in the chancel register (or whatever it's called). There was one high profile case a few years ago where the family had to pay, I think, about £100,000, maybe more. This will soon be a thing of the past though as churches will have to declare the liability on a local register and unless done won't be enforceable, the deadline for this may even have already passed.Road2Ruin said:
55allgold said:
FWIW, the covenants that you MUST look out for and avoid like the plague are those ancient ones involving a nearby church. These frequently contain clauses about having to share in the upkeep of the church. The beneficiary of those covenants (CoE, etc) are still going and have successfully gotten £thousands out of nearby homeowners who thought it was an old and unenforceable covenant.
You're talking about chancel liability (soon to become obsolete), these won't show in the covenants as they are not covenants. Usually the only way to find out about these is by going to the local church and looking in the chancel register (or whatever it's called). There was one high profile case a few years ago where the family had to pay, I think, about £100,000, maybe more. This will soon be a thing of the past though as churches will have to declare the liability on a local register and unless done won't be enforceable, the deadline for this may even have already passed.Older restrictive covenants may be unenforceable - but if the property is on a newer estate, it is likely to be enforceable by any of the owners of other houses on the estate. Insurance in that case wouldn't be a good answer because it'll compensate you for any financial loss (which, since the value of the property isn't going to be affected much, if at all, is going to be negligible) but it *won't* give you free rein to use the property if a beneficiary takes enforcement action.
Really, your solicitor needs to look at two things:
1. who may be beneficiary/ies of the covenant (to ascertain whether it is enforceable); and
2. whether your use would in fact breach the wording of the covenant (because all covenants are worded differently).
Parking a sign-written van on the drive doesn't amount to business use. Occasional working from home won't amount to business use. Even working from home every day wouldn't be business use, in my opinion. So you may find your intended use isn't prohibited.
O/T but regarding chancel liability, yes it is very cheap to insure against (a tenner when arranged under our block policy for buyers) so not a big issue now, and it'll be going away for good soon because the church will have to register any chancel liabilities against your title by October 2013, failing which they won't be able to claim. Funnily enough the property in the infamous case (Wallbank) is for sale currently: Clicky. Not sure you can insure against an ascertained liability!
Really, your solicitor needs to look at two things:
1. who may be beneficiary/ies of the covenant (to ascertain whether it is enforceable); and
2. whether your use would in fact breach the wording of the covenant (because all covenants are worded differently).
Parking a sign-written van on the drive doesn't amount to business use. Occasional working from home won't amount to business use. Even working from home every day wouldn't be business use, in my opinion. So you may find your intended use isn't prohibited.
O/T but regarding chancel liability, yes it is very cheap to insure against (a tenner when arranged under our block policy for buyers) so not a big issue now, and it'll be going away for good soon because the church will have to register any chancel liabilities against your title by October 2013, failing which they won't be able to claim. Funnily enough the property in the infamous case (Wallbank) is for sale currently: Clicky. Not sure you can insure against an ascertained liability!
I used live in a block of flats. It was nothing special but the old gits who also lived there thought it was some gated community. Anyway the covenants were a joke. They stated that:
You are only allowed one music insutrument in the property and it can only be played between the hours of 8:00 AM and 9:00 PM.
You are not allowed to be drunk and disorderly in the communal areas (how I am supposed to get in to my flat when I am six sheets to the wind?).
No washing on the balcony
No parrots or other noisy birds or pets which may cause a disturbance
Load of b
ks mostly
You are only allowed one music insutrument in the property and it can only be played between the hours of 8:00 AM and 9:00 PM.
You are not allowed to be drunk and disorderly in the communal areas (how I am supposed to get in to my flat when I am six sheets to the wind?).
No washing on the balcony
No parrots or other noisy birds or pets which may cause a disturbance
Load of b
ks mostlyRestrictive covenants are just about the most complicated area of law there is.
They are effectively a private additional level of 'planning permission', (usually) nothing to do with the council, and they should not be offering advice or opinions on them.
e.g. You may have council planning permission - but that may not give you the right to build or run a business if a restrictive covenant forbids it.
Restrictive covenants run with the land, not the owner (exceptions apply as ever!). Only the benefitor can attempt to enforce it by applying for an injunction/compensation for resulting loss
The covenant may be unenforceable and/or obsolete for a variety of reasons, you may need to look at covenants on surrounding houses to work out the intention/property affected.
Because of the complexity, the default position many professionals adopt is "oh it's obsolete" - there is a list of criteria for obsolescence, but the courts tend to take the view that the covenant would still have to be 'of no benefit whatsoever'.
You can apply to the Lands Tribunal to have a restrictive covenant discharged/modified. http://www.landstribunal.gov.uk/Jurisdictions/rest...
You can take out an indemnity against attempted enforcement.
They are effectively a private additional level of 'planning permission', (usually) nothing to do with the council, and they should not be offering advice or opinions on them.
e.g. You may have council planning permission - but that may not give you the right to build or run a business if a restrictive covenant forbids it.
Restrictive covenants run with the land, not the owner (exceptions apply as ever!). Only the benefitor can attempt to enforce it by applying for an injunction/compensation for resulting loss
The covenant may be unenforceable and/or obsolete for a variety of reasons, you may need to look at covenants on surrounding houses to work out the intention/property affected.
Because of the complexity, the default position many professionals adopt is "oh it's obsolete" - there is a list of criteria for obsolescence, but the courts tend to take the view that the covenant would still have to be 'of no benefit whatsoever'.
You can apply to the Lands Tribunal to have a restrictive covenant discharged/modified. http://www.landstribunal.gov.uk/Jurisdictions/rest...
You can take out an indemnity against attempted enforcement.
Thanks for the replies. Should have said that the property is freehold. Houses are early '70s.
So what I understand now is that for me to be at any risk of being pulled up on the covenant, the "beneficiaries" ("Transferor" is used in the documents I have) need to want to enforce it. It is nothing to do with the council. So my next Q is, Does / Can the beneficiaries include the neighbours?
The RC reads:
Not at any time to exercise or carry on or suffer to be exercised or carried on upon the land hereby transferred or any part thereof or in or upon the dwellinghouse or garage standing thereon any trade business profession or occupation whatsoever but will occupy and use the land and premises hereby transferred for residential purposes only.
Seems pretty unequivocal to me.
The Transferor is some company called The Southern Trust Limited, and the document says that the "rights" pass to any successor company.
Another Q: if they wanted to enforce the covenant, the only thing they can do is sue for their losses - am I right? If that is right then it is unlikely to happen, since the Transferor pressumably nolonger has any interest in the property (or the rest of the estate) since they are (pressumably) all freehold. Their only reason for enforcing this particular coventant would be, as has been mentioned already I think, that a business being run from the property could affect the value of the others which they were trying to sell (40 years ago).
Have I understood all this correctly? I'll speak to my solicitor about it all but your info and experiences is just as useful, Ta
ETA: oh, and the silliest covenant is something about no caravans, boats or other vessels
although I think it also mentions trailers... will have to check that one out too 
So what I understand now is that for me to be at any risk of being pulled up on the covenant, the "beneficiaries" ("Transferor" is used in the documents I have) need to want to enforce it. It is nothing to do with the council. So my next Q is, Does / Can the beneficiaries include the neighbours?
The RC reads:
Not at any time to exercise or carry on or suffer to be exercised or carried on upon the land hereby transferred or any part thereof or in or upon the dwellinghouse or garage standing thereon any trade business profession or occupation whatsoever but will occupy and use the land and premises hereby transferred for residential purposes only.
Seems pretty unequivocal to me.
The Transferor is some company called The Southern Trust Limited, and the document says that the "rights" pass to any successor company.
Another Q: if they wanted to enforce the covenant, the only thing they can do is sue for their losses - am I right? If that is right then it is unlikely to happen, since the Transferor pressumably nolonger has any interest in the property (or the rest of the estate) since they are (pressumably) all freehold. Their only reason for enforcing this particular coventant would be, as has been mentioned already I think, that a business being run from the property could affect the value of the others which they were trying to sell (40 years ago).
Have I understood all this correctly? I'll speak to my solicitor about it all but your info and experiences is just as useful, Ta
ETA: oh, and the silliest covenant is something about no caravans, boats or other vessels
although I think it also mentions trailers... will have to check that one out too Edited by bulb763 on Thursday 10th March 12:55
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