Restrictive Covenants Explained: A Simple Guide

Restrictive covenants can affect how you use and enjoy your property. Some are minor, such as rules about keeping caravans on the land, while others can be much more limiting.

If a restrictive covenant has been breached, this can cause problems during conveyancing. Most buyers, and their mortgage lenders, will want proof that any breach has been dealt with before completion.

There are a couple of common ways this is usually handled:

• Indemnity insurance – This provides financial protection if someone with the benefit of the covenant later takes action.
• Rectification – Removing or correcting what caused the breach.
• Retrospective Consent – This can, in some circumstances, be obtained from the party with the benefit of the covenant but usually at the cost of a premium.

All of these options have their limits. Indemnity insurance only pays compensation and does not prevent enforcement. Fixing the breach does not guarantee protection against claims for historic breaches. There is also no guarantee that obtaining retrospective consent for historic breaches is obtainable as the party with the benefit of the covenant may be uncontactable or the premiums may simply be too excessive for the standard seller. While retrospective consent is a prudent “belt-and-braces” approach, it can remove more accessible options such as indemnities, which often depend on not approaching the party benefiting from the covenant.

The law provides another option. Under Section 84(1) of the Law of Property Act 1925, the Upper Tribunal (Land Chamber) has the power to remove or change restrictive covenants in certain circumstances.

An application can be made on one or more the following grounds:

• Obsolete – The restriction is no longer relevant because of changes to the property, the surrounding area, or other important factors.
• Unreasonable restriction – The covenant stops reasonable use of the land and provides little or no real benefit to those who can enforce it, or it goes against the public interest. In these cases, compensation would usually be enough to cover any loss.
• Agreement – The people who benefit from the covenant have agreed that it should be removed or changed.
• No real harm – Removing or changing the covenant would not cause any meaningful harm to those who benefit from it.

If a restrictive covenant is affecting your property, we would be happy to discuss your options. Please contact our offices if you would like advice on removing or changing a restrictive covenant.

Saffron Walden office: 01799 523441

Haverhill office: 01440 702485

Sawston office: 01223 832939

Email: [email protected]