breach of covenant blog on express conveyancing

What is a Breach of Covenant?

Today, there are three commonly found property tenures in residential properties. The first is a freehold in which you own the full property and all of the land the property is situated on. These are most commonly houses, even terraced or semi-detached houses most commonly fall under this type of category. The second is a leasehold, which are usually flats, apartments and maisonettes. In leasehold properties you will own a defined proportion of a larger property. The third is a share of freehold, which is similar to a leasehold in which you will own a proportion of a larger property, however you will also own a share of the freehold and so have a say on the management of the whole building. Shares of freeholds also come with added benefits, such as cheaper lease extensions and more say over costs of shared works etc. Our article here looks at the difference between leaseholds and freeholds if you would like more information on this.

What is a restrictive covenant?

All property types or tenures have the potential to come with restrictive covenants, however it is more common for leaseholds and shares of freehold properties to have more covenants and for those to be more restrictive in nature, than in freehold properties by nature of the fact that you do not own the full building. In theory you also live in closer proximity to others than in a freehold so could have more of an impact by way of noise for example. A restrictive covenant is a condition placed on a property or more specifically the owner of a property when one landowner intends on selling some or all of their land to another. It is a way of restricting, preventing, prohibiting or limiting the act of another, as by placing a restrictive covenant on an act, it makes the act enforceable if it were breached. Restrictive covenants are written into contracts, deeds and leases when properties are transferred or varied.

Examples of restrictive covenants

Depending on the age of a property, depends on the type of covenants found. For example, older properties located in rural areas may have covenants placed on them restricting the number and types of animals that can be kept on the land. So for example you may be able to keep one cow, one pig but no goats at your property, or there may be a restriction on the number of domestic pets that can be kept at a property such as only one dog. Although this may seem extreme or, in the case of the cow, pig and goat, unnecessary in today’s society, in actual fact if you think back to the time that the property was built this was very important. It was very common in the early to mid-1900s for families to keep farm animals for food, and other produce. Also in rural areas, members of farming families may have moved into new build houses close to their family farm which has the potential to extend the farm, and landowners selling land to developers may not want the land to be used as farmland. Planning departments may also place conditions on any planning consent granted for land to be used for quiet residential enjoyment for example.

Flat leases also contain restrictive covenants. Some are fair, such as taking responsibility for keeping common parts of a wider builder clean and tidy and not placing obstructions in stairwells or corridors, disposing of refuse in the correct receptacle, parking vehicles in marked bays and generally avoiding any act which may be of annoyance to neighbours. Leaseholds also often come with strict covenants on when the flat should be painted, every 3, 5 or 7 years, restrictions on times at which televisions, radios and musical instruments can be played, what can be displayed in windows, what can be placed on balconies or outside. Some are very strict such as a prohibition on slamming the outer door, what types of flooring and soft furnishings can be used or strict restrictions on what properties can be used for.

Breach of covenants – structural changes

A very commonly seen restrictive covenant especially in leasehold and share of freehold properties is a restriction on any structural or internal changes to a property. In most cases, written consent is required from the landlord prior to commencing works. The reason this covenant is placed on many properties, especially leaseholds is due to the fact that the individual properties provide support to neighbouring properties. In the event a load bearing supporting wall is removed without proper support structures, this could have a huge impact on the remainder of a block of flats. In addition, a Landlord may have restrictive covenants placed on them as part of the freehold title and also ultimately at the end of your property’s tenancy, the ownership of the property returns to the Landlord. Now this type of covenant includes the more obvious such as removal of internal walls, but also replacement of kitchens, bathrooms and even flooring. Not everyone fully understands the extent of consent required and so may not realise that consent was required, however this would not prevent action being taken if the landlord deemed it necessary.

breach-of-covenant-300x300 What is a Breach of Covenant?How to handle a breach of covenant as a property owner?

If you are aware of a breach of covenant, you could leave yourself open to legal action being taken by the landlord or beneficiary of the covenant. You may have to reinstate the property to its original condition prior to carrying out the works, and you may have to pay damages and legal fees. It could prove costly.

If you believe there is a breach of covenant, it is important to get legal advice at the earliest opportunity to look at the best way of moving forward.

How to handle a breach of covenant as a purchaser?

When buying a property, your conveyancer will carry out title checks. One of the checks will be to identify any restrictive covenants on the property. As covenants pass with the land, meaning they stay on the property and become the responsibility of the new owner, any responsibility for adhering to the covenants pass to you when you become the property owner. By extension any breaches that have occurred prior to you period of ownership also become your issue if action is taken, even if you didn’t breach the covenant yourself. Any restrictive covenants will be reported to you by your conveyancer as part of the report on title and so it is important to remember that your conveyancer will not visit the property or inspect it and so if you believe there may be any breaches, you should notify your conveyancer at the earliest opportunity.

Depending on what the breach is and when it was, depends on what remedies are available. Your conveyancer may insist that the seller obtains retrospective consent from the landlord prior to exchange of contracts, or an indemnity insurance policy may be sufficient to protect you from any enforcement action taken. If you intend on purchasing with mortgage finance, it may be that consent to proceed is required from your lender also. It is important to take the advice of your conveyancer.

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