Restrictive Covenants-freeing up the restrictions

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16 April, 2020

The Upper Tribunal recently considered an Application to modify a restrictive covenant in Edgeware Road (2015) Ltd v Church Commissioners for England [2020] UKUP 104 (LC).

Facts

Edgeware Road (2015) Ltd (E) held a long lease over a multi floored premises on a large estate in London, and Church Commissioners for England (C) were the owners of the estate. The lease contained a restrictive covenant preventing the property from being used for residential or sleeping purposes. The covenant even specified that the first and second floors were to be used as offices. C sought to control what happened on the estate and the uses of the premises on the estate by way of these restrictive covenants.

E wished to convert the vacant first and second floors, together with part of the basement into a Pod Hotel. When C refused to modify the restrictive covenant, E applied to the Upper Tribunal.

Modifying Restrictive Covenants

The Upper Tribunal is permitted to modify a restrictive covenant provided that the criteria contained within s84(1) of the Law of Property Act 1925, are met. The criteria are:-

  • The restriction is obsolete;
  • The continued existence of the restriction would impede a reasonable user of the land as the benefit is of no practical benefit or it is contrary to public interests;
  • The beneficiary of the covenant consents to the discharge or modification; or
  • The discharge or modification would not injure the beneficiary of the covenant.

In addition, the restriction must be such that money would not provide adequate compensation.

Decision

C submitted evidence that allowing the modification would negatively impact their control over the estate. They went on to argue that because of the nature of the benefit, there was no way of knowing what long term financial impact there would be and so they could not be compensated with money. The Tribunal accepted these arguments and refused the Application.

Comments

Restrictive covenants are a tricky business and it is vital that you understand what is and is not permitted on the land. Failure to do so can have significant impact on your ability to develop a site and can lead to costly consequences.

If you need advice regarding discharging or modifying a restrictive covenant, contact our specialist Property Litigation Solicitor, Laura Hallett Lea via email or phone on 0333 207 1141. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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