Restrictive Covenant

[v8lante]

Hi in the process of buying a house which has a restrictive covenant on extending....put on by the original builder (early 50's) now long gone. Our solicitor... who's been fairly useless has said it won't be a problem as they no longer exist...they're happy to quote to remove it but have said it will be costly! Does anyone on here have any experience on this?

[EddieSteadyGo]

You just buy insurance to cover the risk of someone taking legal action against you for breaking the covenant. Based on your description, the risk of any action being taken is very low, and so this should be reflected in the insurance premium.

I was going to buy a bungalow which had a detached garage. There was a restrictive covenant from the 1950's held by the neighbouring property which prohibited building a two story property on the garage area. I don't think the owners of the adjacent property knew they held a covenant but they were strongly against any proposed development.

In the circumstances if I remember correctly the insurance policy I was quoted to protect against the risk was around £5k. Whilst I didn't go ahead with the purchase, a developer did buy it, took the insurance cover and built a very large property where the garage was previously located.

[Elysium]

Insurance is probably the solution, but you should look at possible beneficiaries of the covenant.

Restrictive covenants are contracts between owners of land and they 'run' with that land when it is sold. This means that they bind successive owners to the original terms. You need to identify the land parcel (dominant land) that benefits from the covenant and try to work out if there is any possibility that the existing owners will either know about it or be likely to want it to continue to apply. Every situation is different.

You should also think about the potential for the covenant to be enforceable. In this case, the big question would be if it actually has a material impact on the beneficiary.

Insurance will cover costs, but there is still some risk that an extension would need to be removed in the worst case. You should think about that limited risk before purchasing.

Some good info here:

https://www.land-registry-documents.co.uk/news-blo...

[v8lante]

Thanks for that...very helpful..... A covenant can be created by separate deed (a Deed of Covenant). The deed will need to be protected by the entry of a notice on the register of title and needs to be signed by the covenantor though not necessarily by the covenantee....am i reading this right that you can place a covenant on a property without the owner being fully aware?

[Mr Pointy]

v8lante said:

Thanks for that...very helpful..... A covenant can be created by separate deed (a Deed of Covenant). The deed will need to be protected by the entry of a notice on the register of title and needs to be signed by the covenantor though not necessarily by the covenantee....am i reading this right that you can place a covenant on a property without the owner being fully aware?

I think you have it the wrong way round. It needs to be signed by the owner being burdened, but not necessarily by the person who is to benefit. (I am most definately not a lawyer).

[anonymous-user]

v8lante said:

...am I reading this right that you can place a covenant on a property without the owner being fully aware?

No, the owner will have signed the Deed so knows the covenant exists.

There's a difference between,

• the existence of the Deed, which will always bind the people who've signed it, and
• registration of the Deed at the Land Registry, which means the Deed will bind future buyers of the property as well.

As a buyer of a property you are only bound by things which are either, (i) already registered at the Land Registry, or (ii) you sign yourself.

[Ken Figenus]

Covenant experts here it seems - hope its not a hijack but if a detached house that had considerable amount of land was sold, could you put a covenant on the original sale to state that if any additional houses were built there then the original seller would need to get, say, 15% of the market value of each and every house built? Clearly legal advice and tight wording would be needed, but, in principle?

Thanks

[anonymous-user]

Ken Figenus said:

Covenant experts here it seems - hope its not a hijack but if a detached house that had considerable amount of land was sold, could you put a covenant on the original sale to state that if any additional houses were built there then the original seller would need to get, say, 15% of the market value of each and every house built? Clearly legal advice and tight wording would be needed, but, in principle?

Thanks

Yes, it's possible.

[Mr Pointy]

Ken Figenus said:

Covenant experts here it seems - hope its not a hijack but if a detached house that had considerable amount of land was sold, could you put a covenant on the original sale to state that if any additional houses were built there then the original seller would need to get, say, 15% of the market value of each and every house built? Clearly legal advice and tight wording would be needed, but, in principle?

Search the forum for 'overage' & 'uplift'

https://elselaw.co.uk/buying-selling-land-simple-g...

[Elysium]

v8lante said:

Thanks for that...very helpful..... A covenant can be created by separate deed (a Deed of Covenant). The deed will need to be protected by the entry of a notice on the register of title and needs to be signed by the covenantor though not necessarily by the covenantee....am i reading this right that you can place a covenant on a property without the owner being fully aware?

A restrictive covenant is a contract between two landowners. So they each need to agree to it when it is entered into.

The complexity comes from the fact that the obligations and benefits are passed on to successive owners of the land and that on many occasions the land parcels are divided up so that there may be multiple owners.

So, if this relates to a housing development. The developer might be the original beneficiary, but this might pass down to dozens of individual home owners as the land is carved up.

The covenant will usually be visible on the title at the land registry website. But it can get confusing as the original covenants may be of little relevance to the current beneficiaries. Also, older covenants may not be shown on the title and it could be difficult to work out who currently benefits from them.

Insurance can protect you against enforcement costs, but if this restricts extensions the worst case is that someone might force demolition of completed work, so you need to give some thought to who might be the current beneficiary, the level to which they might care about the issue and the validity of this as a genuine enforceable covenant.

[CanAm]

Elysium said:

...........

The complexity comes from the fact that the obligations and benefits are passed on to successive owners of the land and that on many occasions the land parcels are divided up so that there may be multiple owners.

So, if this relates to a housing development. The developer might be the original beneficiary, but this might pass down to dozens of individual home owners as the land is carved up.
..............

Exactly my situation. A restrictive covenant prevents me from :-

1. Operating the property as a lunatic asylum (with 2 teenagers this was close at times)
2. Keeping pigs ( see above)
3. Operating as an airport ( safe unless I can buy a Harrier)

[trickywoo]

CanAm said:

Exactly my situation. A restrictive covenant prevents me from :-

I have one preventing me running a lime works.

My feeling is that unless the holder has a sizeable monetary gain to make they won’t be bothered and furthermore the longer it’s been in place the less likely anyone will want to take ownership.

[Ken Figenus]

Mr Pointy said:

Search the forum for 'overage' & 'uplift'

https://elselaw.co.uk/buying-selling-land-simple-g...

Thanks for the link - seems I didn't have a bright idea ! Pretty std