Buying a property is an exciting moment. You found your dream house, survived the estate agent’s enthusiastic description of the “cosy” second bedroom and are beginning to imagine where the sofa will go. Then you discover a few lines of fine print that could turn into a big problem. That is where restrictive covenants come in.
A restrictive covenant is a legal restriction affecting what you can do with a property. It might prevent you from building an additional property, running a business from home, altering the property in a particular way or carrying out certain types of development.
The good news is that finding a restrictive covenant on the title does not automatically mean that your plans are doomed. The important thing is to understand exactly what the covenant says, whether it affects your property and whether it can be enforced.
Written by Wai Ling Chin, Solicitor
What is a restrictive covenant?
A restrictive covenant is essentially a legal promise not to do something with a property. Common examples include covenants preventing an owner from:
- building an additional property or extension;
- using the property for business purposes;
- altering its external appearance;
- using it other than as a single private dwelling; or
- carrying out particular types of development.
Not every covenant found on an old title is automatically enforceable. Whether a particular covenant can be enforced depends on matters including the wording of the covenant, the property concerned and the circumstances in which it was created and subsequently dealt with.
Restrictive covenants and planning permission
Planning permission and restrictive covenants are separate matters. You might obtain planning permission for your extension and still find that a restrictive covenant prevents you from building it.
Planning permission asks: “Will the local planning authority allow this development?”
The covenant asks a rather different question: “Does someone else have a legal right to object to you doing it?”
So you can, unfortunately, get a “yes” from the council and still have a problem with your title. Planning permission does not, by itself, remove or override a private restrictive covenant.
How do I know whether my property is affected?
For registered property, restrictive covenants will often be referred to in the title register. The register may refer to an earlier transfer or conveyance containing the full wording. The precise wording can be critical. For example, “not to use the property for any trade or business” is different from “not to use the property other than as a private dwelling”.
If you intend to work from home, let the property, build an extension or create a separate dwelling, these distinctions may be significant. The title register is therefore an important starting point, but the underlying historic documents may also need to be reviewed.
An eight-point checklist
When assessing a restrictive covenant, consider:
- Identify – What does the covenant say and which land does it affect?
- Interpret – What does the wording actually mean?
- Benefit – Who has the right to enforce it?
- Burden – Does it bind the current owner?
- Interest – What was the covenant intended to protect?
- Scope – Exactly what activity or development is prohibited?
- Breach – Would your proposed use or works breach it?
- Remedy – Can consent, release, variation, insurance or an application to the Upper Tribunal be considered?
Can a restrictive covenant be removed?
Depending on the circumstances, it may be possible to negotiate a release or variation with the person entitled to enforce the covenant. Alternatively, section 84 of the Law of Property Act 1925 provides a mechanism for applying to the Upper Tribunal (Lands Chamber) for certain restrictive covenants to be discharged or modified, provided the relevant statutory conditions are satisfied.
What happens if I breach a restrictive covenant?
The consequences depend on the circumstances and the nature of the covenant. If an enforceable restrictive covenant is breached, the person entitled to enforce it may be able to seek a remedy through the courts.
Depending on the circumstances, this could include an injunction requiring the breach to stop or, in an appropriate case, damages. This is why it is generally better to investigate the position before carrying out the work rather than discovering afterwards that a neighbour or another person is objecting.
What should you do?
Do not assume that an old covenant is automatically unenforceable. Equally, its presence on the title does not necessarily mean your plans are doomed. If you are buying a property, tell us about your intended plans before exchanging contracts. If you already own the property, review the title before committing substantial sums to building or development works.
In short, a restrictive covenant is not necessarily a reason not to buy a property, but it is something that should be understood before you commit to a purchase or a particular development.
Our Residential Property team are experts in advising on restrictive covenants on property titles. Contact us here.
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