The existence of a restrictive covenant on land can seriously affect its value, as it can restrict the use to which the land can be put, for example not being able to use land for residential purposes. It is therefore important to do your research in advance of any purchase to ensure that your development plans are feasible. More often than not, this will involve the support of a specialist property solicitor.
What is a restrictive covenant?
A restrictive covenant is an agreement by deed that one party will restrict the use of its land in some way for the benefit of another. A restrictive covenant must be negative. This may actually affect the land’s value quite significantly depending on the purchaser. Land with a restrictive covenant might be valued at considerably less by corporate developers if there is a restriction on building. Conversely, land with this same covenant may have enhanced value to a private buyer because neighbouring land cannot be built on, thus preserving a view and peace and quiet.
Find out if there is a restrictive covenant on the land
Any potential purchaser of land must do all they can to check if there are any restrictive covenants which might be enforceable. This is particularly relevant to anyone purchasing at auction.
If the land is registered, the restrictive covenant would normally be registered too. In cases of unregistered land, it is advisable to consult a professional immediately.
The implications of a restrictive covenant on the land
If the land is subject to a restrictive covenant, you will then need to identify who has the benefit of it and if it is enforceable.
Generally, a restrictive covenant will be enforceable between the original parties provided it is clear, negative and does not breach competition law or public policy. Third parties can sometimes take the benefit of a restrictive covenant.
Very often the original parties to the deed have sold the land and there are strict rules defining enforceability if that is the case.
How to deal with an unwanted restrictive covenant
There are a number of requirements that need to be satisfied in order to enforce a restrictive covenant. A summary of these requirements are set out in our Legal Hub article: Real Estate: Restrictive Covenants Affecting Land.
If the restrictive covenant is enforceable, there are a number of options you can take:
- Negotiate with those who have the benefit of the covenant
- Obtain an indemnity insurance policy
- Apply to modify or extinguish the restrictive covenant
How can Pinney Talfourd help?
Restrictive covenants are a complex area and can be very contentious. All property developers need to be aware of the significance of restrictive covenants and work alongside specialist property solicitors to ensure appropriate action is taken. Pinney Talfourd have experienced and professional solicitors who regularly deal with restrictive covenants and are able to advise on modifications and on any injunctions already imposed.
Restrictive Covenants Lawyers
