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The Restrictive Covenant Specialists website is run by Jonathan Kenwright, a solicitor at Croft, in Cheltenham, and Andrew Francis, a barrister at Serle Court Chambers in Lincoln’s Inn, London. We specialise in the law of restrictive covenants over land.
We have many years experience in this area of law and Andrew is the author of the leading text book on the subject.
This website aims at opening up the subject of restrictive covenants. It sets out the issues clearly and simply so that you can understand the law and practice on the subject, which can sometimes be difficult to understand. Because of our expertise we can offer full and informed advice if you would like us to provide that.
What is a restrictive covenant?
Restrictive covenants on property are usually attached to the title to land and they create a burden, obligation or restriction on one piece of land for the benefit of another piece of land and its owners. A covenant is a legally binding promise not to do something…
Does the covenant affect me?
If a restrictive covenant is preventing you from building or taking some other step it may be possible to applying to discharge or modify a restrictive covenant but before you consider trying this you will need to check whether there is a valid covenant and whether it is enforceable…
How to remove a covenant?
There are a number of ways of dealing with restrictive covenants: for example, indemnity insurance, agreement and negotiation, and modification or discharge.
Assuming the Upper Tribunal discharges or modifies the covenant it has a wide discretion to award compensation to the person who had the benefit of the covenant. There is no hard and fast formula or discernible pattern in the awards due to this discretion.
The rules do say that compensation should be based on the actual loss (if any) suffered. Therefore the question to ask is whether the proposed development, if built, would cause a drop in the value to the objector’s property. Even when there has been a drop in value the application can still be successful. For example in one case the Upper Tribunal allowed an application when it was determined that there had been a drop in value of the property of 5%.
In theory the awards should not be high if they were then they would not be made in the first place as this would suggest that the objector was able to show that the proposed development would cause a substantial devaluation in his property.
In spite of many people thinking otherwise, the Upper Tribunal does not normally take into account the fact that a developer may make a profit.
Disruption and Nuisance
The Upper Tribunal may decide that the effect of discharge or modification is not such as to cause any loss to those with the benefit of the covenant in terms of a drop in the value to the land but that the disruption and nuisance caused by the development should attract compensation.
This area attracts raised compensation only and should not have an effect on assessing whether the covenant should be discharged or modified in the first place. Awards in this area are normally not high. Say about £5,000.
Sometimes a restrictive covenant will state that alterations and building can only take place with the permission of the person with the benefit of the covenant, often the adjoining owner. The covenant may also provide that consent cannot be unreasonably withheld. This type of covenant can be as problematic as an absolute bar to any changes or building works.
Assuming the covenant is binding and valid, the first step is to request permission to carry out the changes. For example, you may have just obtained planning permission, in which case, you present the plans to the neighbours and ask them whether they give their consent to the proposed changes going ahead.
As mentioned above, there can be an express requirement that the neighbour cannot be unreasonable. Even if it is not part of the wording in the covenant, the duty to act reasonably can also be implied in some cases.
If this person does not consent to the proposed works, one remedy would be to seek a declaration in the court that the person with the covenant has been unreasonable. The burden is on the applicant to show that any decision to refuse consent is unreasonable.
The other approach might be to seek a discharge or modification of the covenant to allow the proposed works by applying to the Upper Tribunal.
As a way of the court assessing whether that person has been unreasonable, in withholding consent, a surveyor may have to determine whether there would be a drop in value to the objector’s property, caused by the proposed building, and to provide a loss of amenity value based on the duration of the building works and the temporary disruption they might cause.
Negotiation
There is no reason why you cannot commission the surveyor’s report before you contemplate going to the Tribunal or court. You could use this report for the basis of a commercial offer perhaps offering a nominal amount of money based on the suggested drop in value and the loss of amenity as set out in a report. The general rule is that a reasonable fee is chargeable for the consent which will nominally relate to the cost of the person with the benefit of the covenant obtaining legal advice.
Court or Tribunal?
In terms of tactics it may be better not to make a formal application in the Court and instead apply to discharge or modify the covenant in the Tribunal. This application could perhaps be made on the basis that the covenant does not secure to the objector any benefit of substantial value. In other words, the proposed works will not cause any significant diminution in value to the objector’s property. However, in adopting this approach there is a risk that the Tribunal might find that the objector has been reasonable in refusing consent.
If the Tribunal route is successful, the claimant may have to pay some compensation and costs. With regard to costs these can be high, depending on the case, the evidence and the nature of the obligation. Under the Tribunal’s practice directions it is more normal for an applicant to pay his own costs as well as his opponents costs of the substantive application even if successful however, the respondent’s conduct and other factors can change the application of this rule; e.g. where the respondent acts unreasonably by taking bad points and wasting time with a hearing.
You need to check the deeds or obtain the title documents from the Land Registry to discover whether any restrictive covenants affect your property. Usually, the burden of the covenant is referred to. If you have a copy of the Land Registry title documents (often called the office copy entries) for your property you will see in the “Charges Register” that the wording in the covenant is set out. Sometimes the Charges Register refers to another document, such as a transfer or a conveyance, which might contain the original wording of the covenants and you will need to get hold of this document.
Case Study
Mr Smith inherited a small plot of land in 1978 near Oxford. The land had no building on it and no planning permission and Mr Smith was aware that the neighbouring property had the benefit of a restrictive covenant which prevented any building on his plot.
Over time, various people had offered to buy the land but Mr Smith wanted to keep the plot as a potential investment. He applied for planning permission on a number of occasions but was turned down. In 2006 Mr Smith had been told that most covenants were not set in stone and it was possible to challenge them. He was encouraged to have another go and reapplied for planning permission. In spite of his neighbours’ objections, he obtained permission to build a four bedroomed house based on plans prepared by his architect. Although the neighbours’ objections did not prevent Mr Smith obtaining planning permission they still had the benefit of a restrictive covenant and their solicitor pointed this out to Mr Smith and reminded him that he was not allowed to build.
Mr Smith then obtained a written legal opinion from a barrister which indicated that the restrictive covenants, although they were binding, could be challenged on the basis that the proposed building would have no or little detrimental effect on the neighbours’ property.
Mr Smith, on the advice of the barrister, then commissioned a surveyor’s report and the surveyor reported that building the property would have no effect or a minimal effect on the value of the neighbours’ property.
Mr Smith then disclosed the surveyor’s report to the neighbours and indicated that he may have to apply to the Upper Tribunal to have the covenant discharged or modified. The neighbours finally agreed to accept a sum of money from Mr Smith in exchange for agreeing to lift the covenant. Mr Smith had a Deed of Discharge drawn up at his own expense which the neighbours then signed and this was lodged with the Land Registry. At the same time Mr Smith paid the neighbour the agreed sum of money.