What is a Restricted Covenant?
A restrictive covenant can be defined as a private agreement between property owners where one party will restrict the use of its property or land. Common examples of restrictive covenants include:
- preventing new owners from altering the architectural style of the building
- restricting the height or appearance of any extension
- stating that the new owner cannot use the property for trade or other businesses.
- Prohibiting keeping livestock
Restrictive covenants, once agreed between the parties, are placed in the title deeds to the property as previously stated.
Are restrictive covenants for new build properties only?
No, they can apply to both new and older properties.
Why do restrictive covenants Exist?
In many cases, restrictive covenants are designed to uphold certain standards for all residents within the vicinity. Property developers of housing estates or flats will often add restrictive covenants to a Transfer Deed in order to prevent owners from undertaking work or other practices which could impact negatively on the development as a whole – such as the certain style of windows or the colour palette of exterior decoration. As well as property, restrictive covenants can also be applied to land with Landowners placing restrictive covenants on the piece of land, they are selling to protect value, minimise damage and retain a degree of control.
How do I find out if the property I am buying is subject to a restrictive covenant?
Your solicitor is responsible for highlighting any covenants. So, if they miss one, you are within your rights to complain to the Legal Ombudsman and the solicitor could be forced to pay compensation. This is one of the reasons why it is imperative to ensure that you instruct a qualified conveyancing solicitor.
How will a restrictive covenant affect me?
The most important thing to know about restrictive covenant is that it is applicable to all future purchasers of the property and not just the first or original buyer – this is known as ‘running with the land’ That’s why it is important for you as a buyer to discuss this with your conveyancing solicitor so they can examine the deeds to see if there are any covenants before you sign anything. Remember that once signed, you will already be accountable for any breaches that you incur. Additionally, you should check where the ‘benefit of the covenant’ is located and whether it has passed onto another person or company. This is because they will be responsible for the enforcement of the restriction and answering queries related to the covenant. As a buyer, you should also determine if the property’s value will be affected in the future due to the provisions of a covenant.
Do restricted covenants expire?
For registered lands under the Land Titles Act, the restrictive covenant will last for 20 years from the date of its creation or notification on the land register. It can be extended for 10 years each time.
Can a restrictive Covenant be removed?
For prospective land or property purchasers, it may be possible to speak to the vendor or ‘successor in title’ with a view to having any restriction lifted. In other words, it may be possible to remove your restrictive covenant – but it is important to understand that there are no guarantees. If you can agree to have the covenant removed, a ‘Deed of Release of Restrictive Covenant’ should be drawn up and signed. In the situation whereby a restrictive covenant is in place, but the beneficiary is unknown, it cannot be enforced, or it is simply unreasonable (which is especially the case if the reason for the restriction is no longer in existence), it may be possible to request permission to have the restriction removed or modified, by applying to the Upper Tribunal but this process can take up to three years.
Hopefully this covers the top line considerations regarding restrictive covenants. As you can see it can be one of the factors that can make purchasing a property more complicated, and among the reasons you need to instruct quality conveyancing services. Whilst this may all sound daunting be assured that here at Hunton & Garget we have vast experience across the conveyancing sector and our aim is to ensure your experience of the home buying journey is as swift and hassle free as possible – let us worry about Restrictive Covenants on your behalf!
We are always happy to answer any queries you may have – you can find full details of our services here and please don’t hesitate to contact us if we can be of any assistance.