Restrictive Covenants impact so seldom on our lives that there needs to be a brief explanation as to what they are. Most people happily get by without a mention of them until or unless they sell or buy their home when suddenly their Solicitors get very exercised about the existence of them or worse still the breach of them.
Restrictive Covenants are obligations imposed permanently on properties usually as a result of a sale taking place where the seller retains nearby or adjoining land. Typically a multi dwelling housing estate is a likely modern source for such covenants although they equally feature where a plot of land is sold with the seller retaining remaining land.
At this stage it should be realised that this note does not deal with flats which are invariably leasehold where different rules apply or where covenants (called positive covenants) require money to be paid or work to be done.
People selling houses or land whether a National Building Company or a small land owner will very often try to restrict what their buyer and those who come after the buyer can do on the land sold in case something happens which is detrimental to the land retained by the Seller. In such situations the Seller often imposes a number of prohibitions called “Restrictive Covenants” on the sale preventing eg: unwelcome or antisocial uses to which the land being sold might be put. Typically these in a modern housing estate would be vetoes against use of properties except as single private houses or for buildings not to be extended or altered without the original seller’s consent.
The aim of sellers imposing covenants is usually to maintain and reinforce standards in an area and possibly the outlook from the sellers retained ground. In past times covenants against keeping livestock were typical and, moving with the times, covenants now sometimes prohibit the parking of caravans or boats or the installation of satellite dishes or intrusive security lighting.
Characteristic of restrictive covenants is the fact that they are binding not only on the immediate buyer but also future owners. Equally they are usually enforceable by the original seller and often by those who subsequently acquire the seller’s retained land. This is the basis upon which some land owners as successors to earlier seller are able to veto development of adjoining land or at least require the payment of a “ransom” for permission to develop. Such permission being a matter of private law between individuals is over and above the public law aspects of requiring Council Planning Permission.
Where however covenants are imposed in the sale of individual dwellings on modern housing estates and each individual buyer enters into a raft of covenants, it should be understood that the Seller ie: the building company usually aims to dispose of all its land whether as the sites of individual houses or land for public benefit eg: roads and green spaces. As such the building company will not aim to retain land which might enable it to enforce the covenants nor usually does it transfer the benefit ie: the right to enforce the covenants to other later buyers. In reality therefore with building estate covenants when “push comes to shove” it is very often highly questionable whether such covenants are enforceable against individual owners who might seek to breach them.
More often than not when a covenant is broken eg: by a home owner building an extension without the required permission of the original builder/seller there are no consequences other than the requirement at point of sale for the seller to fund at modest cost the one off premium for a specialist insurance indemnity policy. In fact this requirement is largely driven by the lending industry which requires such policies to be taken out to safeguard its borrowers and also itself against any risk of enforcement action on a covenant however remote or unlikely it might be.
It is usually in more localised situations where the existence of the covenant may be well known to the original buyer and seller or their respective successors that there is more likely to be a risk of attempts to enforce the covenant. By virtue of a quirk with Land Registry practice, although the covenant is flagged up in the title registers for the land or property burdened by the covenant nevertheless the right to enforce it (often in the hands of a neighbour) is not recorded by the Land Registry on the neighbours title registers.
In such a situation it would often take a land owner who is not risk averse to take a course of action eg: start building a house in breach of a covenant without coming to terms with the party with the right to enforce. In such a situation the savvy land owner wishing to build a property or to take some other course of action in breach of covenant will be well advised to come to an agreement with the party with the right to enforce the covenant as there are two basic remedies open to the would be enforcer in such situations ie:
- To seek a Court Order blocking building work or whatever action is being carried out in breach of covenant and/or
- Seek an award of monetary damages reflecting the loss to the enforcer. Even when there is no obvious loss of outlook or amenity to the “enforcer” courts have awarded compensation reflecting the enforcers expectation to receive a ransom payment from the party in breach
From the point of view of the would be enforcer ie: the person who imposed the covenant or the person who now owns his land any attempt to enforce the covenant is likely to require very swift action as the Courts are unlikely to be sympathetic to an enforcer who allows his neighbour to spend substantial sums in getting Planning Permission and then starting building before taking enforcement action. Any would be enforcer in such a situation would need to take very urgent legal advice. It has to be emphasised that covenants and their enforcement are private rights between individual land owners whether people or companies. The existence of an anti-development covenant, for instance, does not entitle a Planning Authority or planning objectors to rely on its existence to block development. This is a remedy available only to the land owner who either imposed the covenant and kept nearby land or his successor.
Indemnity Insurance is usually available where there has already been a breach of covenant without any enforcement action taking place. It is usually not available where the landowner proposes to take a course of action in advance or in prospect to breach the covenant. Having said this some insurance underwriters are prepared to offer cover in such situations where in reality the situation is one of a gamble rather than insurance.
The more clued up property Lawyers are aware that even when covenants are recorded at the Land Registry, if they are particularly old ie: even up to the 1950’s it is always worth carrying out a check with a body called the Land Charges Department to see whether the covenants were properly registered with the Department in the first place as it is not unknown for would be enforcers to “bite the dust” when it is realised that the covenants are not properly registered with the Land Charges Department in the first place and did not get to be properly considered when ownership was first registered at the Land Registry.
As ever whether you are encumbered by a covenant or think you have the right to enforce it, please take expert legal advice in advance of any course of action covered by the wording of the covenant.
For further information, please contact Michael Setter in the Property department on 01616 202405 or email firstname.lastname@example.org. WBW Solicitors has nine offices across the South West in Newton Abbot, Bovey Tracey, Torquay, Paignton, Exeter, Launceston, Exmouth, Sidmouth and Honiton.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.