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.
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.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
YouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.