Considering purchasing a property, but feeling dissuaded by the restrictive covenant attached to the land or building? These legally-binding and often enforceable legal clauses are well worth understanding if you want to avoid making a potentially costly mistake.
Fortunately, Freeman Jones Solicitors has an extensive team of in-house legal professionals including expert restrictive covenant solicitors that specialise in this complicated area.
To support you with making a more informed decision, we answer some of the most frequently-asked questions surrounding buying a property with a restrictive covenant. From whether restrictive covenants devalue a property to what happens if you ignore these clauses, our experienced legal team can help.
Should I be worried about a restrictive covenant?
While not all restrictive covenants are an automatic cause for concern, there’s certainly no harm in seeking professional legal advice.
As some covenants can be more restrictive than others, it’s worth consulting with an experienced solicitor to find out more about the scope and complexity of the clause and the extent to which it could impact your property purchasing plans.
For example, some restrictive covenants may prevent you from extending your property (even if you have planning permission), while others may stop you from raising livestock on your land.
The more costly restrictive covenants are likely to revolve around development limitations, such as the prohibition of building a new structure or extending an existing building. Other development limitations can include the prevention of shed and garage structures.
Do restrictive covenants devalue a property?
In many (though not all) cases, restrictive covenants can devalue the property or land that they apply to. In short, this is because it limits the changes that the new owner can carry out, making it a significantly less appealing opportunity to property investors and developers.
Restrictive covenants can also be unattractive to prospective residential buyers that want to extend or significantly alter the property to either add value or meet their own family needs. However, it’s still worth bearing in mind that not all restrictive covenants impose the same degree of limitations.
Do restrictive covenants transfer to new owners?
Yes, restrictive covenants do transfer to the new land or property owners. This is because these legal clauses, by their nature, are attached to the property or transfer deeds, rather than an individual or company that owns the property.
As a result, the policy will last in perpetuity and is passed on to not only the immediate buyer, but also future owners. This mean when you come to sell the property with a restrictive covenant in the future, it could be a significantly harder or longer process.
Should you buy a house with restrictive covenants?
Unfortunately, there’s no straightforward ‘yes’ or ‘no’ response when it comes to answering the question ‘should I buy a house with a restrictive covenant?’.
As restrictive covenants can vary greatly in the extent and number of limitations they impose upon a particular property or piece of land, each case should be approached with the necessary caution, consideration, and due diligence.
Both conveyancers and solicitors have a responsibility to bring restrictive covenants to your attention, so it’s worth seeking expert legal advice. Once a legal professional has reviewed the relevant documentation, including the title deeds and any other pertinent paperwork, they should be able to advise you further.
Alongside explaining the scope and legal implications of the restrictive covenant, they can also help you to determine whether your particular plans for the property (such as extending the building or selling some of the land) would be affected by this covenant.
If a restrictive covenant does have a substantial impact on your plans, a solicitor can help you to understand your legal options. Often, this involves determining the cost and likelihood of getting the restrictive covenant removed or changed.
What happens if you ignore a restrictive covenant?
Eager to ignore the restrictive covenant on a property that you want to purchase in hopes that it goes away? This course of action isn’t recommended and can lead to significant legal consequences including costly, stressful, and time-consuming legal action.
This is because nearly all restrictive covenants are legally binding in the UK and enforceable by the beneficiary (also known as the covenantee). As a result, they could make a legal claim against you if you make any restricted changes.
For example, if you extend the property by ignoring the restrictive covenant that prevents you from doing this, then the covenantee could pursue a court order for the extension to be removed. This action would be on top of any financial compensation they might also claim to cover damages and their legal costs.
While there may be come cases where the restrictive covenant isn’t legally enforceable (for example, if the terms are too ambiguous), a legal professional won’t typically recommend that you completely ignore a restrictive covenant.
In any case, it’s important to seek accurate legal advice before making any changes to the property that could go against the terms of the restrictive covenant. This will ensure you’re fully aware of all the potential legal and financial implications.
How do you get around restrictive covenants on property?
As restrictive covenants have no official expiration date and can continue in perpetuity so long as their legal requirements are met, ‘getting around’ these clauses often involves changing or removing them.
There are two ways that you can alter or remove a covenant on a property in the UK – seeking legal action from the Upper Tribunal (Lands Chamber) or through negotiation with the covenant beneficiaries.
Negotiate with the beneficiaries
Before you seek legal action, it’s often advisable to see if you can come to a mutual agreement with the beneficiaries of the restrictive covenant first, if they can be identified. Not only is this approach more amiable and affordable, but it’s also a prerequisite for taking the matter further and applying to the Upper Tribunal (Lands Chamber).
If the beneficiary of the restrictive covenant cannot be identified, you can take steps to protect yourself as well as future owners of the property by taking out indemnity insurance. In the event that the covenantee comes forward to enforce its terms, this insurance can protect you by covering any damages resulting from the covenant enforcement.
An experienced solicitor can support you with understanding your restrictive covenant insurance needs and finding a sufficient level of cover from an indemnity insurance provider.
However, more often than not, the beneficiaries of property-related restrictive covenants are likely to be your neighbours. This offers an even greater reason to keep any discussions between yourself and the covenantees as amicable as possible.
As the terms of the restrictive covenant will naturally benefit the covenantees, they are unlikely to agree with the changing or removal of it without some kind of financial compensation. Negotiations with a legal professional are therefore recommended to help calculate and advise upon the suggested amount of compensation.
Coming to an agreement between yourselves is often the best solution in these cases to help resolve issues quickly and without legal action. Otherwise, getting a restrictive covenant removed, especially if disputed by a beneficiary, can take up to two years and come with significant legal costs.
The team of specialist solicitors at Freeman Jones Solicitors can support with this stage of the restrictive covenant modification or removal process. Alternatively, we can also provide you with comprehensive legal advice if you believe that you’re a covenantee of a restrictive covenant that’s been breached.
Apply to the Upper Tribunal (Lands Chamber)
If negotiations with the covenantees hasn’t delivered the desired results, then your only option is to apply to the Upper Tribunal (Lands Chamber). One of four chambers of the Upper Tribunal, the Lands Chamber can be contacted to either modify or discharge a restrictive covenant.
They can make this application under section 84 of the Law of Property Act 1925 by filling in Form T379 and paying the statutory application fee of £880. It will then be assigned a case number and any beneficiaries of the covenant will be given notice and an opportunity to object.
If a decision can be made without a hearing, you will need to pay a fee of £275. Alternatively, if an official hearing is necessary, a more substantial payment of £1100 is required. For the hearing to take place, a site inspection will be carried out by the tribunal judge or member hearing the case.
Once a date has been set for the hearing, you may want to consider seeking legal representation, if you haven’t already. While some applicants choose to represent themselves, the law surrounding restrictive covenants can be complex, so many opt to communicate via a legal representative.
If there are objectors, then you will need to provide them with any relevant material that might support your case before the hearing. Applicants and objectors should provide witness evidence for both the other party and the tribunal at a set date.
Similar to any other court hearing proceedings in the UK, the applicant will set out their case, either by representing themselves or with support from a solicitor. This is their opportunity to present witness evidence under oath or affirmation, offer up documents that support their case, and set out their argument to the tribunal and objector.
Both the tribunal and the objector are able to cross-examine and ask the witness under oath or affirmation any relevant questions. Once the applicant has finished setting out their case and presenting their evidence, it’s the objector’s turn to put forward their legal argument.
After considering all the evidence, documents, and legal arguments, the Lands Chamber will make a decision. Once a decision has been made (typically a few weeks after the hearing), the applicant and any objectors will be informed of the decision in writing.
It’s worth bearing in mind however, that an additional fee of £220 is required to draw up the tribunal’s final order. Added to all the other statutory tribunal costs and the fee for any professional legal advice and representation you choose to seek, hearings can be expensive.
If you’re interested in buying a house with restrictive covenants and seeking legal action seems like your only option, please don’t hesitate to contact the specialist restrictive covenant solicitors at Freeman Jones Solicitors.
Is a restrictive covenant preventing your property purchase? Ask us for advice
At Freeman Jones Solicitors, we understand that adverse title issues and unforeseen restrictive covenants can feel like someone’s taken the wind out of your sails when it comes to purchasing a property.
Regardless of whether you’ve fallen head over heels for a fixer-upper family home or can see mounds of potential in property that comes with acres of land, the expert restrictive covenant solicitors at Freeman Jones can help.
Using comprehensive pre-contract searches and enquiries, our experienced team will ensure you’re aware of any restrictive covenants attaining to the land or property you’re interested in purchasing. We’ll also make sure you have a clear understanding of the potential impact of the restrictive covenant and your legal options to help prevent any unwanted issues from derailing your purchase.
To find out more about our professional and client-focused legal services, please don’t hesitate to contact our helpful team today by calling 01244 506 444.
You can also get in touch by sending your enquiry via email to info@fjsolicitors.co.uk or by filling our convenient online contact form that you can find below.
