What is a Covenant?
A covenant is a provision, or promise, contained in a deed to land. Land may be subject to a covenant which affects or limits its use. This is known as the burden of a covenant. A covenant may give a landowner some say over what is permissible on neighbouring property. This is called the benefit of a covenant.
A covenant can be very important as it could affect the value of land or its intended use.
Positive or Restrictive
There are two different types of covenant, positive and restrictive. The distinction is important as positive and restrictive covenants affect land in different ways.
A positive covenant requires some form of action to be taken e.g. to erect a fence along a boundary. Positive covenants are generally a contract between the original parties to the deed imposing the covenant and do not bind future land owners. However it should be noted that future owners of the land which has the benefit of a positive covenant can enforce the covenant against the original owner of the land that has the burden of the covenant.
A restrictive covenant limits or prevents the use of land in a specified way to the benefit of other land. Restrictive covenants are said to run with the land. This means that the benefit and burden of the covenant relates to land itself and not to the land owner. If one of the original parties to the restrictive covenant sells their property, the covenant will remain enforceable.
Restrictive Covenants might be used in circumstances such as:-
- Not allowing a house to be used for business purposes.
- Not allowing non domestic animals to be kept on the property e.g. Chickens, pigs etc.
- Not allowing building on land without consent of the party who has the benefit of the covenant.
It is important to note that a covenant can be expressed in positive terms when it is in fact restrictive, and vice versa. If you are considering how a covenant could affect your property, or a property you intend to purchase you should consult a property lawyer who can advise you.
There are specific requirements for a restrictive covenant to bind subsequent owners of a property and the law surrounding this area is complex and subject to a number of legal tests.
How Restrictive Covenants affect property
The covenant imposed on one parcel of land must actually benefit the other land by protecting its value or enjoyment at the current time (not just at the time the covenant was created)
If the other land does not actually benefit from the covenant it will not be enforceable.
The original parties to the covenant must have intended that the burden of the covenant would remain with, and pass with the land every time the ownership changed. This can only happen if the covenant was expressed to benefit adjoining land. If there is no express intention to benefit the adjoining land the burden of the covenant will not pass and the covenant will be regarded as a personal agreement between the original parties. Subsequent parties will not be bound by the covenant.
For a restrictive covenant to be enforceable a buyer must have notice of it. It must:
- Be registered in the title to the property at HM Land Registry (or as a Land Charge if the title is unregistered.)
- The covenant must not be too uncertain or ambiguous, be prohibited by competition law or be contrary to public policy
The law around the enforceability of a restrictive covenant against an individual purchasing a property subject to a covenant is complex and there are specific tests that have been created in order to establish whether a successor to a property will be subject to the burden of a restrictive covenant.
What happens if a Restrictive Covenant is breached?
If a restrictive covenant has been breached (or there is a threat of a breach) the usual remedy sought is that of an injunction to stop the breach (or threat).
The Court also has the power to award damages in lieu of an injunction. There are two types of damages that can be awarded:
- 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
If legal proceedings are issued it is possible that the losing party will have to pay the other party’s legal fees.
What can I do about a Restrictive Covenant?
There are a number of ways to remove the burden imposed on a property through a restrictive covenant.
One option is to seek a release from the party who has the benefit of the restrictive covenant. The party with the benefit may be unwilling to release the covenant and compensation may be required.
Alternatively The Lands Chamber of the Upper Tribunal (previously the Lands Tribunal) has jurisdiction to discharge or to modify a restrictive (but not a positive) covenant where the applicant can show that one of the grounds set out in Law of Property Act 1925, s 84 applies. The most commonly used grounds are that the covenant has become obsolete or where it impedes reasonable use or development. Any application provides the opportunity for objections to be raised to the application and if disputed, the matter can take a substantial amount of time to be resolved and the process can be quite lengthy.
If an application faces an objection but is successful, the applicant will not be able to recover legal costs from any of the individuals who objected. If the application fails, the successful objector will usually get an award of costs meaning the applicant may have to pay a contribution to the objector’s legal fees.
If the remedies above are not available or it is not clear if the restrictive covenant can be enforced, a more practical way of proceeding would be to obtain indemnity insurance in order to protect against the risk of someone enforcing the terms of a restrictive covenant against you or your property.
Available Advice from Ison Harrison
If you believe that your existing property, is subject to a restrictive covenant and you want advice on the meaning or enforceability of that covenant, we can assist you.
If you are buying a property and you instruct us to act for you, our team of conveyancers will ensure that you are fully advised of the effect of any restrictive covenants affecting the property.
Our Residential Property Department will be happy to take your call and to provide you with details of the services offered by our conveyancers. The team can be contacted directly on 0113 284 1516.
Often issues only arise once a restrictive covenant has been breached and this can lead to an expensive and protracted dispute.
Whenever a dispute does arise it is imperative to contact a solicitor at the earliest possible opportunity. This will ensure that you are fully advised of your rights and liabilities, a solicitor will be able to act on your behalf ensuring that your interests are fully protected.
Our lawyers are very experienced in dispute resolution and will be able to take over conduct of your case, taking the stress away from you and providing piece of mind knowing that your dispute is being dealt with by a team of solicitors with knowledge of the procedural requirements.
Do not hesitate to contact us today on 0113 284 5000 if you have any queries in relation to the content of this article or would like to have a free initial, no obligation conversation with one of our property specialists.
