They are called Restrictive Covenants for a reason but what are the dangers of ignoring them?

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05 March, 2021

Restrictive covenants on areas of land can have implications for anybody wishing to purchase the land, this is especially the case where the purchaser aspires to develop or change the land. The recent Supreme Court ruling in Alexander Devine Children's Cancer Trust v Housing Solutions Ltd (2020) is a recent example of the potential pitfalls of not paying enough attention to restrictive covenants before entering into an agreement.

What is a restrictive covenant?

A restrictive covenant is a private agreement between landowners, where one party will restrict the use of its land in some form, for the benefit of the other's land. Once agreed between the parties, a restrictive covenant is placed in the property's title deeds. A hugely important aspect of restrictive covenants is that they 'run with the land'. This means that the covenant continues to be binding even where the original parties to the covenant have sold the land.

What happens if you go against a restrictive covenant?

Failure to abide by a restrictive covenant may lead to court proceedings being issued against you. Courts have been historically strict on enforcing restrictive covenants - even going so far as to order a developer to knock down buildings that went against the restrictive covenant. The consequences are that you may be forced to pay damages as well as being subject to any injunctions granted by the court.

Alexander Devine Children's Cancer Trust v Housing Solutions Ltd

As were the circumstances, in this case, Housing Solutions Ltd ('the Developer') sought to modify a restrictive covenant that would enable them to develop housing properties. The homes were built before they applied to modify the restrictive covenant, with which the application was later rejected by the Supreme Court.

It is important to note that obtaining planning permission does not mean you can go against a restrictive covenant forbidding any development

Can restrictive covenants be removed or altered?

Applications to remove or alter a restrictive covenant can be made to the Upper Tribunal (the 'UT'). Applications made are normally granted by the UT on the basis that:

1. The beneficiary is unknown; or

2. It cannot be legally enforced; or

3. It is deemed unreasonable.

In such applications, the UT will seek to determine if:

1. The restrictive covenant out to be deemed obsolete;

2. The beneficiary consents to remove or modify the restrictive covenant;

3. The continuation of the restrictive covenant would impede the user of the land for public or private purposes;

4. If changing or removing the restrictive covenant will damage the beneficiary.

It is important to note that this is both a potentially costly and time-consuming process - it may take 18-24 months before the UT decides.

Conclusion

Before proceeding to purchase land that is subject to any restrictive covenants, it is important to first seek legal advice on the implications of the restrictive covenants.

For more information contact Jo Higham in our Commercial Property department via email or phone on 01772 220177. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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