Buying a property is one of the best things you can experience. However, you must understand that owning property doesn't always grant complete freedom to modify or use it as you see fit. This is where restrictive covenants come into play. These are legal agreements embedded in the deed of the property that dictate what you can and cannot do with your property. So, whether you’re looking to buy a new property or carry out a couple of renovations, understanding restrictive covenants allows you to enjoy your property while avoiding serious legal consequences down the line.
This article covers:
The definition of restrictive covenants, its common types, and origins.
The effect of restrictive covenants on property use.
The legal implications of restrictive covenants and the options available to manage or challenge them.
The best practices for homeowners and the risks associated with restrictive covenants.
What Are Restrictive Covenants?
A restrictive covenant is a legally binding agreement that limits the activities a property owner can perform on their property. This agreement imposes certain obligations that property owners are bound to follow regarding the use or development of their property. Generally, restrictive covenants are created when a property is sold and are included in property deeds. They may originate from:
Developer-Imposed Covenants: These are covenants imposed by property developers when building housing estates or communities. This is to preserve the aesthetic appeal and quality of the buildings in a neighbourhood.
Planning Agreements: Covenants can also be imposed as part of planning permission agreements to serve broader public interests, such as preserving historic landmarks.
Restrictive covenants may either be positive or negative. Negative covenants consist of actions you can’t take, such as a covenant forbidding you from building a fence. On the other hand, positive covenants consist of actions you must take, like mowing your lawn. Restrictive covenants also come in various forms
Some of the common types include:
Building restrictions
Commercial use restrictions
Restrictions regarding alterations to the property
Preservation of green spaces
How Restrictive Covenants Affect Property Use
Since there are several types of restrictive covenants, they have varying effects on how a property can be used. Here are the ways restrictive covenants affect property use:
Limitations on Development: In many cases, restrictive covenants prohibit building new structures or developing existing ones. For example, a covenant could restrict you from adding new structures like sheds and garages to your home. These restrictions may also usually contain details on the height, width, or type of extensions you wish to add.
Restrictions on Property Modifications: Restrictive covenants may also define how you can alter a property’s features or overall appearance. This prevents any changes affecting the property’s unique historical or architectural qualities. It often includes limitations on external renovations, such as altering the property's façade.
Commercial Use: Another common restriction is prohibiting using the property for commercial purposes. This restriction often prohibits the operation of home-based businesses such as offices or workshops and aims to prevent any noise or traffic associated with commercial activities.
Enforcement of Restrictive Covenants
Enforcing a restrictive covenant is a vital key to ensuring its effectiveness. Here is a breakdown of how enforcement works and the consequences of breaching a restrictive covenant:
Who Can Enforce a Covenant?
The right to enforce a covenant typically lies with the party that benefits from the restriction. This could either be the neighbouring property owners, property developers, or management companies. These parties can enforce the covenant by filing a lawsuit when there has been a breach.
Consequences of Breaching a Covenant
Breaching a restrictive covenant has consequences for the property owners and developers who established the restriction. For example, a property owner who breaches a restrictive covenant may face a lawsuit or an injunction order to stop the activity causing the breach. They may also be required to pay financial compensation to those affected by the breach.
On the other hand, if future buyers are aware of an unresolved legal issue, the property may lose its market value, leading to great losses for the property developers.
Time Limits on Enforcement
The right to enforce a restrictive covenant is subject to the doctrine of laches, which places time limits on enforcing a right. The doctrine of laches is a principle that prevents the benefitting party from enforcing their right if they delay for an unreasonable amount of time after being aware of the breach. This is to discourage property owners from sitting on their rights while waiting for certain conditions to change to tilt the scales in their favour.
Managing and Challenging Restrictive Covenants
In certain cases, restrictive covenants could make it difficult to enjoy the basic benefits of having your property. When these legal constraints hinder your plans, it's important to know that you don't have to accept them at face value. Here are some ways to manage and challenge these covenants:
Review the property title deeds: Before buying a property, it’s best to review the title deeds to know if they contain a restrictive covenant. This helps you avoid any future legal risks or disputes.
Seek legal advice: Sometimes, restrictive covenants could contain legal terms that are difficult to understand. So, it’s advisable to seek legal advice from a property solicitor to help interpret the terms or provisions of the restrictive covenant. These solicitors can also clarify the implications of the details in the covenant.
Apply for a modification or removal: If a covenant is obsolete or preventing the reasonable use of your property, you can apply to the Lands Tribunal to have it modified or removed. You can also do this if the modification or removal won’t harm the beneficiaries of the covenant. The application process usually takes between 18 and 24 months.
Negotiate with Beneficiaries: Negotiating with the covenant's beneficiaries is another option. This could involve paying financial compensation or reaching a mutual agreement that benefits both parties.
Challenges and Risks of Restrictive Covenants
Although restrictive covenants may help maintain a property's quality and aesthetics, they also come with certain risks and challenges. These include:
Impact on Property Value: A major risk of imposing a restrictive covenant is that it could discourage potential buyers who find the restrictions too limiting. This eventually reduces the property’s appeal and market value because buyers won’t be lining up to purchase the property. Ultimately, the property could be on the market for so long that the seller would have to lower the sales price to salvage the situation.
Difficulty in Modifying Old Covenants: Another challenge is the difficulty in modifying old covenants. Most old covenants were created based on conditions that have become obsolete. Unfortunately, they’re still legally binding, and the process of modifying or removing them is usually lengthy. You might also have to go through the hassle of taking legal action or negotiating with the beneficiaries.
Legal Disputes: Restrictive covenants often expose you to several legal disputes and complications regarding using your property. If you unintentionally breach the covenant, you might face a lengthy and expensive litigation process. This could put you on bad terms with your neighbours, local authorities, and the beneficiaries of the covenant.
Best Practices for Homeowners
Check for covenants before purchase: While some restrictive covenants are not so limiting, others might be extreme and prevent you from fully enjoying your property. Therefore, ensure you thoroughly check for any restrictions before purchasing a property. Understanding these restrictions will help you avoid unpleasant surprises that expose you to legal risks.
Obtain legal clarity: Sometimes, the scope and implications of a restrictive covenant might be difficult to understand. In such a case, it’s best to obtain legal advice. A legal professional can help assess the validity of the restrictive covenant and guide you on potential avenues for modification or removal.
Maintain good relations with neighbours: The beneficiaries of restrictive covenants are often neighbouring property owners. This means that they have the right to enforce the covenant. So, maintaining a good relationship with them helps to prevent any disputes regarding property use. It also helps in cases where you want to negotiate with them to modify or remove the covenant.
Legal and Regulatory Considerations
The primary legislation that governs restrictive covenants under UK property law is the Law of Property Act 1925. This law generally makes provisions for creating, enforcing, and managing restrictive covenants. It also provides the grounds for removing or modifying a restrictive covenant and allows the covenant to be attached to a property deed.
Another thing to consider is that covenants often "run with the land." This means that the agreement transfers from one owner to the next. So, it’s important to be aware of any covenants affecting your property regardless of whether you signed the agreement.
Regulatory Guidance
The Lands Tribunal is a regulatory body that handles applications to modify or discharge restrictive covenants. If you have an outdated or overly burdensome covenant, the Tribunal can guide you through the modification process. It also considers whether the covenant is still relevant and what its impact is on its beneficiaries.
Consulting Legal Professionals
Due to the complexity of restrictive covenants, it’s advisable to consult legal professionals before purchasing a property. This professional guidance can help to ensure compliance and prevent an accidental breach of the covenant. Furthermore, legal professionals can help with your application to the Lands Tribunal by ensuring that your property rights are fully protected.
FAQs
What are restrictive covenants on property?
Restrictive covenants on property use are legally binding agreements that dictate what a property owner can do with their property.
Can restrictive covenants be enforced?
Yes, restrictive covenants can be enforced. This can be done by taking legal action in court.
How do I find out if my property is subject to a restrictive covenant?
You can find out if your property is subject to a restrictive covenant by checking the property title deeds or requesting a copy of the title register from the HM Land Registry.
Can I challenge or remove a restrictive covenant?
Yes, you can challenge or remove a restrictive covenant if it is obsolete or prevents the reasonable use of your property. This process involves submitting an application to the Lands Tribunal.
What happens if I breach a restrictive covenant?
Breaching a restrictive covenant could expose you to a lawsuit or injunction order requiring you to stop the activity causing the breach. You may also have to pay financial damages to compensate those affected by the breach.
Conclusion
Understanding restrictive covenants is one of the best ways to maximise your purchase. Their impact on property use manifests in various ways, including restrictions on commercial use, limitations on property development, and restrictions on property modification. These restrictions are enforceable by any of their beneficiaries.
In cases where these limitations are obsolete or prevent the reasonable use and enjoyment of your property, you can apply for it to be removed or modified. This process is often lengthy and costly, so it's best to sell legal advice for restrictive covenants before purchasing a property. Lawhive is here to help you confidently navigate the complexities of restrictive covenants. Book a free legal assessment today.