Property Covenants: Restrictive Covenants

23/02/2018
Restrictive covenants or property covenants, regarding land and property law, pass enforceable rights and obligations from one landowner to another on sale or from a landowner to a tenant in the same way. You can often protect yourself from a breach of a restrictive covenant by taking out an indemnity insurance - click to get a policy.

As a general rule, covenants normally restrict or forbid some behaviour - for example the keeping of pets in a block of flats. You can find if there are any restrictive covenants that affect your land by checking Section C Charges Register within your title deeds and these make reference to a Schedule of restrictive covenants listed at the end of the deeds (or within the original deeds). During a purchase your solicitor reports to you regarding any restrictive covenants that are enforceable over the land or you can download a copy of your Office Copies (title deeds) by going to the Land Registry - click here.

Title deeds are created when the land was originally sold by the landowner so the deeds may make reference to restrictions that may not effect you today (your deeds could date back hundreds of years). For example, your title deeds may have a restriction to stop the landowner using the land to trade as a butchers.

Although nowadays this is a strange restriction as you are most likely going to use the property as a residential home, however back when the deed was drafted, this restrictive covenant was important to the original land owner and they didn't want anyone who owns the land, then or in the future, to run a butcher's business from the land. This means that if any future owner of this land were to operate a butcher's from the land, the original land owner could enforce their rights to stop this using the restrictive covenant.


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What is a restrictive covenant?

A restrictive covenant can be defined as a private agreement between land owners where one party will restrict the use of its land in some way for the benefit of another's land. Restrictive covenants, once agreed between the parties, are placed in the title deeds to the property as previously stated. For simplicity in this discussion, you can think of them as something written into your deeds which restricts or prohibits you from doing something to or in the land you've bought or leased.

Restrictive covenants bind the land, not the parties involved

Another way of saying this is that a restrictive covenant 'runs with the land'. This enables a covenant to continue even when the original parties to the covenant sell the land on to other people and can continue to have force even though it was originally created many years before and might appear to be obsolete.

This means that if the person you are buying the land from has breached the restrictive covenant with the original land owner, you and your solicitor need to rectify the breach with the seller during the conveyancing process. Click to read what happens if you breach a restrictive covenant.

Most importantly, restrictive covenants are enforceable by one landowner against another as long as they are restrictive or 'negative' in their effect and they effectively allow a form of private planning control. One common example is where a restrictive covenant on a housing development might protect property values by stopping the modification of the appearance of individual dwellings on the development from a standard 'look', or it might restrict some activity from taking place within its boundaries.

How long do restrictive covenants last?

As touched on earlier, restrictive covenants 'run with the land' and so can theoretically pass on indefinitely or at least until they are challenged and removed by order of a court.

What happens if you breach a restrictive covenant?

The consequences of a breach of a restrictive covenant can be quite severe but will always depend on the covenant itself.

Usually the person with the benefit of the covenant (the covenantee) would serve notice on you stating that you must rectify the breach. If this is not carried out, the covenantee could apply to have the covenant enforced whatever the cost via going to court. The court, if it finds that you've breached a restrictive covenant, can grant an injunction against you regarding the breach and award:

  • Compensatory damages to reflect the diminution in the value of the benefited land by reason of the breach
  • Damages awarded in lieu of an injunction

The court may take into account what you and the covenantee (the legal person with whom you agreed the covenant) would have negotiated for the release of the covenant (for the covenant to be set aside) and whether or not the covenantee claimant may have tacitly acquiesced to the breach by failing to prevent breach while having knowledge of it.

You, as the covenantor, (the person who's had to agree to the covenant) would then have to either reimburse the covenantee or cover the costs yourself. However if the breach was known about for more than 20 years, the covenantee cannot seek to enforce that right. The financial implications depend on the breach and the extent to which this has caused problems for the original covenantee however, if in the case of a covenant not to build, you may have to take any extension down which could affect your property value.

Removing a restrictive covenants (or otherwise accommodate it)

If you are wishing to buy a property or develop on it but there is a restrictive covenant/s restricting your intended use, then there are 4 ways you might overcome this:

    1
    Obtain Restrictive Covenant Indemnity Insurance
If you are buying a property where the current owners, or previous owners, have breached a restrictive covenant then getting an insurance policy is often be the cheapest and quickest option and protects you from attempts to enforce the covenant by the dominant owner. However, if any correspondence is made with the dominant owner about the covenant, it will be extremely difficult to get any insurer to take on the risk.


    2
    Apply to the Upper Lands Tribunal for removal
This can be more costly and lengthy but could permanently remove the restriction from your title, so you might end up potentially making the land interest more appealing to future buyers. You would need to prove one of the grounds set out in s84 Law of Property Act 1925, usually that it is obsolete or impedes on reasonable development or use. We go into detail below about the grounds for removing a restrictive covenant.

Law of Property Act 1925

The Lands Tribunal has powers under section 86 of the Law of Property Act 1925 to dissolve or relax covenants that appear to be out of date or unreasonable. It states:

84. Power to discharge or modify restrictive covenants affecting land
(1A)Subsection (1) (aa) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Upper Tribunal is satisfied that the restriction, in impeding that user, either— (a)does not secure to persons entitled to the benefit of it any practical benefits of substantial value or advantage to them; or (b)is contrary to the public interest;and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.

(1B)In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Upper Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.

(1C)It is hereby declared that the power conferred by this section to modify a restriction includes power to add such further provisions restricting the user of or the building on the land affected as appear to the Upper Tribunal to be reasonable in view of the relaxation of the existing provisions, and as may be accepted by the applicant; and the Upper Tribunal may accordingly refuse to modify a restriction without some such addition.

Read the Law of Property Act 1925


    3
    Approach the person benefiting from the covenant and agree removal of the restriction
Although this might seem to be one of the most cost-effective methods on paper you do have certain challenges in doing this:

  • Where or who has the benefit? - with deeds dating back hundreds of years you may have to search to find who is currently benefiting from the the restrictive covenant and where to write to them. This is easier said than done, especially if it was a private land owner.
  • Will they agree to it? - with some restrictions, especially around developments, you may struggle to get the beneficiary of the restriction to modify it.
  • No longer able to insure - once you make enquiries with the party benefiting from the restrictive covenant then you are no longer able to take our indemnity insurance as you have alerted the beneficiary that you intend to breach it or that it has been breached.

    4
    Take no action
This option is only available if you do not have a mortgage lender because if there has been a breach of a restrictive covenant then the mortgage lender normally requires:

  • Confirmation from the original legal owner's title successor that the restrictive covenant has been modified; or
  • An indemnity policy to protect against any future claim for the breach.

If there's any doubts about whether a restrictive covenant is actually in place or not, you can also apply to a court for a declaration.

The court can determine:
  • Whether or not a restriction does, or may in certain circumstances, exist, and
  • What the nature of a restriction is and if it is enforceable
This can be useful where there is any uncertainty about the covenant itself or whether or not action may be taken as a result of any breach of a restrictive covenant. A negative declaration can be applied for which would remove any need to apply for indemnity insurance.

What are the grounds for discharge or modification of a restrictive covenant?


  • Restriction is Obsolete - obstructs a reasonable user of the land or it is not in the public interest
  • No injury to person who benefited from the restrictive covenant

Examples of restrictive covenants

Here are some examples of restrictive covenants you may find within your title deeds. You'll see that some of the restrictions are actions most owners wouldn't undertake nowadays however they are still enforceable.

  • Forthwith to erect and for ever after to maintain in good condition a spile fence along the boundary of the land marked "T" within the boundary on the said plan" - In this case T would be shown on the title plan registered to the property title.
  • No tall chimney shall be erected on the said land nor shall any building be erected thereon other than dwellinghouses with or without garages, and other outbuildings to be used therewith
  • No trade or business of any kind whatsoever shall be carried on nor shall any beer wines or spirits be sold on the said land or any building erected thereon and the said land and all buildings erected thereon shall be used for private residential purposes only
  • No bricks or tiles shall at any time be made nor shall any clay or lime be burnt on the premises nor shall anything be done thereon which may be or grow to be a nuisance or annoyance to the Vendor or the neighbourhood
  • No building nor any wall or fence exceeding five feet six inches in height shall be erected on any part of the land conveyed by the foregoing Indenture outside the building line shewn on the aforesaid plan
  • No objectionable or offensive trade business or manufacture or any trade business or manufacture that may be or become a nuisance or annoyance shall be carried on upon the said land nor in any building to be erected thereon
  • No public house Inn Beerhouse or Beershop of any description shall be built on the said land nor shall any wine malt liquor or spirituous liquor be sold on the said land or in any building to be erected thereon
  • The Purchaser his heirs executors administrators and assigns shall maintain and keep in repair so much of the footpath aforesaid to the centre thereof with the curbing gutters and drains thereof as adjoins the said land until the same shall be adopted by the Local Authority

Are you looking to challenge a restrictive covenant?

You should always take appropriate legal advice if you are considering making a legal challenge to a restrictive covenant because, as indicated above, this area of law can be very complex. We have specialists conveyancing solicitors who handle this work so please get in contact on 0207 112 5388.

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