How to deal with Restrictive Covenants

Whether you are considering building a new extension, a single house or developing a large site for multiple properties, best practice is to first check the deeds of the property for restrictive covenants.  Restrictive covenants may appear on the legal title to the property and may well restrict further development and/or provide for specific restrictions on new buildings.  Failure to comply with these covenants can result in legal action being taken by the benefiting land owners.

Restrictive covenants bind land and if you are considering developing land which is subject to restrictive covenants then we advise caution and to seek legal advice first before proceeding.

There are ways to deal with restrictive covenants and we set out the following options: 

• Express Release – you may be able to negotiate an express release of the restrictive covenants from the owner of the benefiting land however, the owner will most likely require a cash payment for this release; or
• Land Registry Application – in some cases the restrictive covenants will have a time limit on their effect or were not registered as land charges (if unregistered) so are ineffective.  In which case you can apply to the land registry to remove the entry from the register of the property; or
• Indemnity Insurance – if the restrictive covenants are very old then it is more than likely that you will be able to pay a one off premium for legal indemnity insurance to cover the risk of building on the property and then subsequently receiving a notice of breach; or
• Upper Tribunal (Lands Chamber) – if you cannot obtain an express release or insurance cover for the risk of breach, then you can make an application to the Upper Tribunal (Lands Chamber) for the modification or discharge of the restrictive covenant in question. The Upper Tribunal can order payment of compensation to those who benefit from the restrictive covenants, or make up for any reduction in the price received for the land due to the imposition of the covenant.  An order for modification can be made if the tribunal is satisfied that the restrictive covenant is obsolete, impedes some reasonable use of the land, the beneficiaries expressly or impliedly agree to the modification or no injury will be caused by the same.

So when considering development no matter how small or large, we would highly recommend that the title of the land is checked first before development commences. If development is completed in breach of a restrictive covenant and a subsequent notice of breach is received then in the absence of adequate legal indemnity insurance being in place this could be very costly for the developer concerned.