What are restrictive covenants?
Restrictive covenants or property covenants are a condition that is written into a property’s deeds or contract by a seller. These conditions determine exactly what the homeowner can do or cannot do with their house or land. They can cover a range of issues, some examples are:
- preventing owners from making alterations to a property (such as building an extension or converting a house into flats, for example)
- preventing buildings or other substantial structures from being erected on a section of land
- preventing trades or businesses from operating on the land or
- restricting owners from keeping pets in a block of flats.
You can check what restrictive covenants affect your property by checking the charges register on your property title deeds or asking your conveyancing solicitors to do this for you.
Why are they used?
The main reason they are used is up keep certain standards for all residents.
Examples of restrictive covenants
1. Prohibiting the fixture of satellite dishes or security cameras to the front of the house
2. Parking a caravan or boat in the front garden
3. Keeping chickens or other livestock
4. Allowing a garden to become overgrown and untidy.
Which properties do restrictive covenants apply to?
Restrictive covenants can apply to all properties, from new builds to properties that have been around for years.
How long do they last?
Restrictive covenants ‘run with the land’ and as such can in theory pass on indefinitely or at least until they are challenged and removed by order of a court or the agreement of the parties.
Very old covenants might be considered to not be enforceable because the original landowner or builder cannot be found. The covenant can become historically obsolete. However, there will never be a guarantee and there will always be a risk.
How do restrictive covenants affect homeowners?
The important thing to remember about restrictive covenants is that they ‘run with the land’. This means that they are applicable to all future purchasers of the property and not just the original purchaser. If you are thinking of buying a house therefore, it is imperative that you instruct your conveyancing solicitor to examine the property deeds thoroughly and to flag up the existence of any covenants before you close the transaction as once the title deeds are signed you will be held accountable for any incurred breaches by previous owner(s) of the property.
In addition, it is important to check where the ‘benefit of the covenant’ resides (usually with the current land owner) or whether it has passed onto another individual or private company, as they will be responsible for enforcing any breaches or answering any queries or applications.
Another important factor to consider before purchase is whether the value of a property could be affected going forward because, for example, the provisions of a covenant prohibit the building of an extension or other such work. In some cases, mortgage lenders can refuse to lend on properties where a covenant is deemed to adversely affect future saleability.
In this instance, one option would be to contact the person who put the restrictive covenant in place, or their ‘successor in title’ and ask them if they would agree to the covenant being removed. If it is an old covenant, it is possible that the party no longer exits, and a successor in title cannot be located, you may feel safe in deciding that the covenant cannot be enforced.
What protection exists
If you want to buy a property that has a restrictive covenant on it, you can often take out an insurance policy that will protect you if someone wants to enforce the covenant. The older the covenant, the less the covenant is likely to cost.
What happens if I breach a restrictive covenant?
It is not unheard of for someone to own a property and without knowing breach a restrictive covenant. If you do end up breaching a restrictive covenant then you could be forced to undo any work, pay a fee or you could face legal action.
In scenarios where a covenant has been breached for over 12 months but it hasn’t been challenged then tries to sell the property, they should be able to get restrictive covenant insurance to protect themselves.
What can I do if I breached a restrictive covenant and I’m selling?
Breaching a restrictive covenant can be very technical, it is advised to seek legal advice as soon as you can. The solicitor/conveyancer will be able to
Your conveyancer will check to see that the relevant covenants are recorded on the land charges register as well as look at the wording of a covenant to ensure that it is correctly drawn up and therefore enforceable.
Having established likelihood of enforceability, a conveyancer will usually look for options where insurance can be obtained to cover the liability of any further breach of contract (including any possible damages or compensation, alteration costs, reduction in value of the property as well as legal expenses incurred).
Restrictive covenant indemnity insurance can be obtained when a covenant has been breached for at least 12 months without complaint, but once procured the policy will last in perpetuity and can usually be passed on to future owners of the property. The cost of these policies will depend upon the number of covenants breached and the perceived level of enforcement risk. Fees will range accordingly from around £40-50 up to hundreds of pounds.
Can I remove a restrictive covenant?
If you are purchasing a property and there is a restrictive covenant which for example restricts your intended use of the property, you can remove that restrictive covenant in the following ways:
(1) Apply to court, the Upper Lands Tribunal, for removal
If you want to permanently remove the restrictive covenant from your title, you can make an application to court for it to be removed. This can however be a costly and lengthy process. But having a restrictive covenant removed can also make the land interest more appealing to future buyers.
When making the application to court to remove the restrictive covenant, you will need to provide good reasons for it being removed for example that the restrictive covenant is obsolete or that it impedes on reasonable development or use of the land, which are also called legal grounds.
(2) Approach the person with the benefit of the restrictive covenant and agree removal of the restriction
Approaching the person benefiting from the restrictive covenant and agree its removal with them can be a very cost and time effective way of removing the restrictive covenant.
However, this can also be a challenging process because of the following reasons:
- it may be that the property title deeds date back hundreds of years and you might have to find who is actually benefiting from the restrictive covenant and how to get in contact with them or
- you might struggle to get the beneficiary of the restrictive covenant to agree to modify it or remove if, particularly where restrictions relate to developments or
- once you approach the person with the benefit of the restrictive covenant, then you will no longer be able to take indemnity insurance as you have essentially alerted them that you intend to breach the covenant or that it has been breached.
If a restrictive covenant wasn’t pointed out by my solicitor can I take action and get money back?
When you’re purchasing your property you should instruct a solicitor to examine and check the property deeds. The solicitor is in a position where they must highlight any covenants to you. If the solicitor misses one, then you have every right to complain. You should complain to the Legal Ombudsman and it could end up that the solicitor may be forced to pay compensation.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.