There probably is no better example of exercising your freedom to its full extent than buying your own house and doing with it as they choose. While that’s somehow true, there are times when even an owner of a house can’t actually do as they please with the property. This is because of a concept called restrictive covenants. Having a house with a restrictive covenant placed on it can be quite a problem for people who aren’t aware of them. We take a look at how they work, why you want to avoid breaching them as much as possible, and what you can do if you breach them.
What is a Restrictive Covenant?
When buying a house, the property will have to undergo a conveyancing process. One of the things that a conveyancer checks are restrictive covenants that are attached to a property. This is basically a binding condition written into a property’s deeds or contract by the seller. The condition is there to determine what a homeowner can or cannot do with their house or land under particular circumstances. Usually, these conditions are placed in the interests of the neighbours or the surrounding community.
Restrictive covenants can be placed on new builds or older properties. Many builders and property developers actually use restrictive covenants on the properties they’ve built to stop homeowners from doing something that could affect the surrounding area or even the landscape. They are usually imposed to try and keep an area or development a certain way, such as its layout or appearance. These covenants ‘run with the land’, which means it will affect all future owners of the property. Covenants can cover a wide range of issues, but some of the most common ones include:
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Preventing owners from making major alterations to a property like building new additions or converting a house into a flat.
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Preventing buildings or other substantial structures from being erected on a section of land.
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Preventing trades or businesses from operating on the land.
Why Are Covenants Placed on Properties?
In many cases, covenants are placed on a particular property to uphold certain standards for all residents. It’s mostly to prevent all future property owners from undertaking work or other practices that could negatively affect the neighbourhood or undermine the desired level of uniformity in the appearance of houses in a community. It also helps a lot in maintaining these properties as having the same layout makes it easier to determine any structural problems or issues in the home’s facilities.
A restrictive covenant can include quite a wide range of conditions, from prohibiting the fixture of satellite dishes to parking a caravan or boat in the front garden. Some property developers also impose these restrictions to prevent homeowners from erecting farms or animal shelters on the property, which can be a huge issue to other people in the neighbourhood. In the case of landowners selling a piece of land, they can also impose a restrictive covenant to protect the property’s value and minimise damage or retain a degree of control over it.
How Are Restrictive Covenants Enforced?
First, you need to find out if a property you own or plan to buy has a restrictive covenant. Conveyancing solicitors and licensed conveyancers can help you determine if a property has a restrictive covenant placed upon it. If there are no such things in the contract, then you don’t have to worry about it. If the results speak otherwise, then this is where things can get complicated.
A restrictive covenant can be enforced by the courts only if a beneficiary of the covenant objects. The agreement is enforced by granting an injunction forbidding you to break the agreement.
What Can You Do If a Restrictive Covenant is Being Enforced on Your Property?
If you find yourself affected by a restrictive covenant on your property, you have two options to protect yourself against any action for breaching it:
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Indemnity Insurance - One way to protect yourself is getting insurance coverage regarding any attempt to enforce the covenant. This is called indemnity insurance. However, obtaining insurance cover for this situation may not always be available.
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Invalidating the Covenant - There is a way to invalidate the covenant. It involves seeking a declaration from the Lands Tribunal, which will decide whether the covenant can be enforced or not. The only chance that the Lands Tribunal will dissolve the covenant is if the covenant is found to be out of date or unreasonable.
Insuring yourself against the risk of action for breach is the cheaper and quicker route here. Still, the cover may not always be available where the beneficiaries of the covenant may have notice of a violation or planned breach.
What Happens if You Ignore a Restrictive Covenant?
Choosing to ignore a restrictive covenant isn’t advisable in any way. You risk facing a claim in damages for the breach of the conditions of the covenant in addition to any injunctions granted. There are two types of damages that can be awarded:
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Compensatory damages to reflect the diminution in the value of the benefited land by reason of the breach
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Damages awarded in lieu of an injunction
At this point, you’ll become involved in an expensive court case that’s just not worth all the trouble. So it’s better just to take action as soon as you find out there’s a restrictive covenant imposed on your property and there’s a possibility of you breaching it.
What if I’m Already Making Home Improvements when I Found Out About the Covenant?
As stated above, you can make an application to the Lands Tribunal to have the covenant modified or discharged. But please do remember that this is a costly endeavour, and you need to build a case that focuses on the covenant being unreasonable in any way.
That being said, proceeding with home improvement work despite knowing the existence of the restrictive covenant is an extremely risky undertaking. In a worst-case scenario, you could be forced to completely undo the work and pay compensation to the beneficiary, effectively leading to another costly outcome.
Conclusion
A restrictive covenant can become quite a headache to deal with. Any piece of land may be subject to a covenant that limits its use. It’s only logical to assume that any piece of land or property you’re buying has a significantly high probability of having a restrictive covenant attached to it. So, it makes sense to have it thoroughly examined by a conveyancing solicitor even before you purchase the property.
If you’re planning on buying a property, seek the help of regulated conveyancing professionals to help you determine if there are any restrictive covenants placed upon it. We at Conveyancing Calculator can help you with that. We offer instant online conveyancing quotes as well as help you find a reliable solicitor to work with. Contact us today to get a quote and find a solicitor you can trust!
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