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COVENANTS ON PROPERTY

“Covenants” are essentially dos and don’ts relating to land and can be either positive, usually costing time and/or money  (for example, to construct and/or maintain a boundary fence or hedge), or negative restricting its use and enjoyment (such as not to cause a nuisance or annoyance to neighbours).

A covenant can be negative, even if phrased positively, and vice versa. It is the real intention of the original parties that matters.

The party who makes the promise and is bound to perform it is known as “the covenantor” and the person with the benefit is called “the covenantee”.

As general rules, the burden does not pass to subsequent owners of the property (“successors in title”) if the covenant is positive in nature (although a chain of “indemnity covenants” may have a similar effect), but it may “run with the land” if it is negative. The distinction is, therefore, crucial in legal terms.

In this post, I will concentrate on restrictive covenants and those relating to building, alterations and home improvements in particular.

Any such restrictions should be contained or referred to in the deeds (recorded at the Land Registry if the land has been registered or set out in old Conveyances and other title documents if not) and should be carefully considered both prior to your purchase and post completion.

Just by way of a few examples:

1. Mr and Mrs Smith are buying a property with a conservatory. It transpires that the sellers should have obtained the developer’s prior written consent for this addition.
2. Mr Jones is purchasing a new build property with the intention of converting the garage. Again, the deeds disclose a restrictive covenant requiring the agreement of a former owner.
3. Miss Arthur wants to extend her home, but (perhaps unbeknown to her) there is a prohibition against developing the area in question.
4. Mr Norman and Ms Morris want to build an additional house in their garden, but the deeds state that only one property can be erected on the plot.

All of these are fairly common situations.

Where prior approval was needed, but not obtained, retrospective consent can be applied for provided the covenantee is still in existence (if a company) or alive (if an individual) and can be traced. Even then, the covenantee is “tipped off” and may well decide to enforce the breach. Consequently, retrospective consent is not always the best option. Indemnity insurance may be preferable, whereby, for a single premium, the owner and mortgage lender are covered against the potential loss in value should the structure be demolished etc. It is important to note, however, that such polices only insure against financial loss; they do not and cannot prevent enforcement action being taken in the first place.

Similar considerations apply where agreement is required in the future.

In the case of total prohibitions, as in 3 and 4 above, indemnity insurance may be the only option if the works have already been carried out. If the alterations are yet to take place, the owner could proceed regardless and run the risk of enforcement action being taken, which could prove a costly mistake, especially if, as explained below, neighbouring properties also benefit from the covenant. Alternatively, indemnity insurance may be available, depending on the circumstances. Finally, the covenant may be discharged or modified to permit the proposed development.

There are two ways of varying or releasing a restrictive covenant. The first is to enter into a Deed. However, all parties with the benefit of the covenant must join in. This may not be limited to the original covenantee and/or their successors, but can possibly extend to neighbouring properties if certain conditions are satisfied (including the existence of a “building scheme”).

The second method is to apply to the Upper Tribunal (Lands Chamber) (formerly the Lands Tribunal). The Tribunal may discharge or modify the restriction if it is satisfied that one or more of the grounds set out in section 84 of the Law of Property Act 1925 are made out; and, if it orders the discharge or modification of the restriction, the Tribunal may award compensation to any person entitled to the benefit of the restriction.

Identifying who has the benefit and, conversely, the burden of the covenant can be difficult and technical, as can deciding the best way to proceed.

In summary, covenants are very important and should not be overlooked, either prior to purchase or during the period of ownership. Non-compliance may result in lengthy and expensive litigation and could adversely affect any sale or re-mortgage in the future, not to mention the property’s value.

Of course, covenants are only one aspect of the law of property (another of which is rights over land (“easements”)).

Furthermore, Planning Permission and/or Building Regulations Approval may still be required. Just because development is permitted (in the deeds or by the covenantee/Tribunal etc.), it does not follow that planning consent is not necessary or is guaranteed. Planning law is entirely separate and distinct.

If you are buying or selling property or looking to develop land, I can help, usually for a fixed fee.

For more information, please make a FREE enquiry.