Restrictive covenant question

[TrickyWooWoo]

Hello gents (and presumably occasional lady)

I'm buying a house which the vendor told the estate agent has a covenant on some of the land in the he garden meaning I can't build on that part. No issue for me.

Transpires the covenant passes to me but I need to sign it and so do the owners of the surrounding land who sold the garden as a part of it in 2014.

1 owner says here's a certificate for the ongoing permanent covenant. Sign this no worries.

The other is 80-odd and living in the Highlands somewhere. The solicitor who helped him sell the land has been contacted by the vendor's lot and emailed him. No response as yet.

Question is - what if the old boy doesn't reply? Is the whole deal off? We think he has to agree but again - if he's no found then...

(Our conveyancer is acting for the lender so will be swift once sorted. The SDLT will be huge anyway)

Thank you :-)

[Ean218]

Surely if the third party doesn't sign then it just lapses.

[TrickyWooWoo]

Ean218 said:

Surely if the third party doesn't sign then it just lapses.

'fraid not. At least that's not in the covenant. And our conveyancer insists on finding the other party.

[mikyman]

Speaking from personal experience.I would suggest you get your own independant legal advice on this, as on the face of it,it is quite a complex situation.
Your conveyancer is not working in your best interest, only to get the property sold and a fat fee earned.
There are various types of covenants.I had to virtually go to court against a neighbour who erected a fence between our properties,which was expressly prohibited in the deeds.
Another thought, what if you want to sell the house in the future?
However much you want that house ,hold fire until you are 100% certain about what you are signing.

[anonymous-user]

Unless the covenant's registered at the Land Registry I can't see any reason for you to be affected at all. And if the covenant's registered at the Land Registry it will bind the land into whoever's hands the land may pass so there shouldn't be anything to sign.

Or is it a brand new house? In which case the first owner would need to enter any new covenants.

You need to ask the conveyancer for a proper explanation of the situation and post it on here.

Edited by anonymous-user on Saturday 1st May 18:17

[TrickyWooWoo]

rockin said:

Unless the covenant's registered at the Land Registry I can't see any reason for you to be affected at all. And if the covenant's registered at the Land Registry it will bind the land into whoever's hands the land may pass so there shouldn't be anything to sign.

Or is it a brand new house? In which case the first owner would need to enter any new covenants.

You need to ask the conveyancer for a proper explanation of the situation and post it on here.

Edited by rockin on Saturday 1st May 18:17

Excellent points thank you,

Below is the email from the vendor's solicitor:

'There is a restriction on the title which requires any buyer of the land adjoining X to enter into a deed of covenant with the owners of Y and Z (two close houses) and for them to confirm this so that the restriction can be satisfied'

[blueg33]

If you can’t track down the party who needs to agree, a restrictive covenant indemnity insurance policy should should satisfy lawyers and mortgage companies.

[DonkeyApple]

TrickyWooWoo said:

Excellent points thank you,

Below is the email from the vendor's solicitor:

'There is a restriction on the title which requires any buyer of the land adjoining X to enter into a deed of covenant with the owners of Y and Z (two close houses) and for them to confirm this so that the restriction can be satisfied'

This seems a little weird to be honest. It reads like this is the vendor's issue in that if they fail to get those two signatures then they are liable to any damages, hence why their conveyancer is adamant. He has to to protect himself from his client passing on that liability to him.

This time around the vendor has managed to get once signature easily enough but the second is proving elusive. What happens when you eventually come to sell and have to go through all of this?

It just seems a right nightmare and one that you are buying.

Would this not be the perfect time to push this bag of dog st back to the vendor with a polite request that they put a proper covenant in place that has the building restrictions but doesn't require a treasure hunt to find random humans around the planet to sign every time it changes hands?

Maybe worth you chatting to the neighbour who has signed to find out what the history is and why it had to be done they way it has been done? But ultimately just ask the vendor to tidy it up rather than pass it to you?

[TrickyWooWoo]

Great points re insurance and the covenant hassle. At the moment we're waiting on the second party to reply to an email sent by the solicitors actign on the sale ion 2014. I don't inow how long we wait but we must complete before Jun 30 or the STLD will put us off at £46k.

The insurance runs in perpetuity and is titled Unknown Restrictive Covenants, Rights and Easements.

Therefore it seems our lawyer is on the case - she's just not great at communicating to us.

Questions from her to the vendor's lawyer include:

Please provide a draught deed of covenant in respect of the restriction against the property

Pls confirm that that the unknown restrictive covenant indemnity policy is transferable - they have confirmed it is

Pls have the limit of the indemnity policy increased to the current value of the property - it's already included in the schedule

So...now we wait.

And 100% agree re what happens if we want to see in 10 years

[blueg33]

TrickyWooWoo said:

Great points re insurance and the covenant hassle. At the moment we're waiting on the second party to reply to an email sent by the solicitors actign on the sale ion 2014. I don't inow how long we wait but we must complete before Jun 30 or the STLD will put us off at £46k.

The insurance runs in perpetuity and is titled Unknown Restrictive Covenants, Rights and Easements.

Therefore it seems our lawyer is on the case - she's just not great at communicating to us.

Questions from her to the vendor's lawyer include:

Please provide a draught deed of covenant in respect of the restriction against the property

Pls confirm that that the unknown restrictive covenant indemnity policy is transferable - they have confirmed it is

Pls have the limit of the indemnity policy increased to the current value of the property - it's already included in the schedule

So...now we wait.

And 100% agree re what happens if we want to see in 10 years

See if you can increase the indemnity policy value above current market price to make it hold more water in the future (not all insurers allow you to do this)

[TrickyWooWoo]

blueg33 said:

TrickyWooWoo said:

Great points re insurance and the covenant hassle. At the moment we're waiting on the second party to reply to an email sent by the solicitors actign on the sale ion 2014. I don't inow how long we wait but we must complete before Jun 30 or the STLD will put us off at £46k.

The insurance runs in perpetuity and is titled Unknown Restrictive Covenants, Rights and Easements.

Therefore it seems our lawyer is on the case - she's just not great at communicating to us.

Questions from her to the vendor's lawyer include:

Please provide a draught deed of covenant in respect of the restriction against the property

Pls confirm that that the unknown restrictive covenant indemnity policy is transferable - they have confirmed it is

Pls have the limit of the indemnity policy increased to the current value of the property - it's already included in the schedule

So...now we wait.

And 100% agree re what happens if we want to see in 10 years

See if you can increase the indemnity policy value above current market price to make it hold more water in the future (not all insurers allow you to do this)

The policy goes up 10% per year from inception up to 2 x the original value of the house. So in 2014 it was 360, we're paying 610 and the insurance will go to 720. Will see what we can do. (And thank you again for the assistance)

[springfan62]

I have just sold a property with the same title restriction and as I understand it the purchaser cannot register their title without satisfying this restriction.

When I queried why this was required I was advised that whilst restrictive covenants follow with the ownership of the land positive ones do not follow in the same way, hence the need for positive acceptance by newowners.

[TrickyWooWoo]

springfan62 said:

I have just sold a property with the same title restriction and as I understand it the purchaser cannot register their title without satisfying this restriction.

When I queried why this was required I was advised that whilst restrictive covenants follow with the ownership of the land positive ones do not follow in the same way, hence the need for positive acceptance by newowners.

This is a restrictive c. so apparently we have to sign it and so does some bloke in the Highlands. But we have the insurance policy as above. So I ask the lawyer (1) if we have insurance then why are we trying to find the Wandering Haggis Muncher anyway as we hurtle towards prohibitive SDLT and (2) if we can't find him or he doesn't reply then how long do we wait? 1 day, 1 month or 1 millennium? There's no answer.

[DonkeyApple]

springfan62 said:

I have just sold a property with the same title restriction and as I understand it the purchaser cannot register their title without satisfying this restriction.

When I queried why this was required I was advised that whilst restrictive covenants follow with the ownership of the land positive ones do not follow in the same way, hence the need for positive acceptance by newowners.

Putting aside the inconvenience and extra cost they seem a better approach in some ways as it keeps the covenant details much more clearly in the minds of all the owners that it exists to protect.

[TrickyWooWoo]

DonkeyApple said:

springfan62 said:

I have just sold a property with the same title restriction and as I understand it the purchaser cannot register their title without satisfying this restriction.

When I queried why this was required I was advised that whilst restrictive covenants follow with the ownership of the land positive ones do not follow in the same way, hence the need for positive acceptance by newowners.

Putting aside the inconvenience and extra cost they seem a better approach in some ways as it keeps the covenant details much more clearly in the minds of all the owners that it exists to protect.

That does make sense but only if after an as yet unspecified time the legals say ok we'll let you rely on the insurance. After 30th June the SDLT goes up by another 20k and we won't want the house. A lot of expense and hassle to keep it clearer in strangers' minds. Would rather our own lawyer explained all this and gave us the option. Right now it's 'no signature - no mortgage'

[DonkeyApple]

It's certainly annoying. You'd have thought the vendors would have got their house in order during their sale prep. I suspect that you are not alone in the stamp countdown as it has been a golden opportunity to add that stamp saving onto the asking as well as getting away a tricky sale due to the time pressure.

I wish you luck but it might be worth considering opening the dialog with the vendor now as regards your offer having to drop by more than the stamp should they fail to get their paperwork in order in time if it is the case that you will walk if they fail.

[blueg33]

The only time in my life I have hired a private dectective was to track down a covenant beneficiary.

[TrickyWooWoo]

blueg33 said:

The only time in my life I have hired a private dectective was to track down a covenant beneficiary.

The SDLT is on us really at this moment as we're not 'replacing the main home'.

Once your PI finds the covenant holder do they have to sign to pass into from the vendor's covenant to ours? What's to stop him saying 'Och hoots ahl no be signin' yon covenant unless youze gimme the price o' a pint o' heavy. And a 997. Turbo.'

[blueg33]

TrickyWooWoo said:

blueg33 said:

The only time in my life I have hired a private dectective was to track down a covenant beneficiary.

The SDLT is on us really at this moment as we're not 'replacing the main home'.

Once your PI finds the covenant holder do they have to sign to pass into from the vendor's covenant to ours? What's to stop him saying 'Och hoots ahl no be signin' yon covenant unless youze gimme the price o' a pint o' heavy. And a 997. Turbo.'

Good question. In the case I cited above the bloke was deceased so couldn't sign anything. The covenant prevented development (I am a developer) so I went with and indemnity policy and a statement from the PI that there were no identifiable successors.

In your case, I think its best no to try to hard to locate him and go with the indemnity cover, but you will need to ensure that its ok with a mortgage company as that could impact your ability to sell in the future.

[Notreallymeeither]

https://www.gov.uk/government/publications/notices...


I think para 3.9.1 may help - basically I think you may be able to apply to the Land Registry for the restriction to be disapplied in circumstances where you can prove you’ve done what needs to be done (ie you have signed the document saying you will comply with the covenant)

get your lawyer to look in to this