When you buy a residential or commercial property, your solicitor will review the title documents to check whether the land is affected by any covenants. A covenant is a legal promise relating to land. Some covenants restrict what you can do with a property. Others require you to do something or pay towards something. Understanding the difference can help you avoid unexpected costs, delays or problems with your plans for the property.
What is a restrictive covenant?
A restrictive covenant is a promise not to do something on or with land. Common examples include restrictions on building new structures, using a property for business purposes, keeping certain animals, causing nuisance, or altering the appearance of a property without consent.
For example, you might want to buy a property with a large garden because you plan to build a workshop. If the title contains a restrictive covenant saying that no additional buildings can be built on the land, you may not be able to build the workshop without dealing with the covenant first. This can be the case even if you were not the person who originally agreed to the restriction.
Do restrictive covenants run with the land?
People often say that restrictive covenants “run with the land”. In simple terms, this means that a restrictive covenant may bind later owners of the property, not just the person who originally agreed to it. However, enforceability depends on the wording of the covenant, the land it was intended to benefit, whether the benefit has passed to the person trying to enforce it, and how the covenant has been protected or registered.
A restrictive covenant is separate from planning permission. A buyer may have planning permission for a proposed development but still be prevented from carrying it out if the development would breach an enforceable restrictive covenant.
Can a restrictive covenant be removed or changed?
Sometimes a restrictive covenant can be released or varied by agreement with the person who has the benefit of it. In other cases, it may be possible to apply to the Upper Tribunal (Lands Chamber) to discharge or modify a restrictive covenant under section 84 of the Law of Property Act 1925. This is a specialist process and legal advice should be taken before relying on it.
What is a positive covenant?
A positive covenant is a promise to do something or to spend money. Common examples include obligations to maintain a shared driveway, contribute to the upkeep of private estate roads or landscaped areas, repair a boundary feature, or pay towards services provided for an estate.
Using the workshop example, a positive covenant might require the owner to maintain the roof of an existing workshop, contribute to the cost of maintaining a shared access road, or keep certain shared areas in good repair.
Do positive covenants run with freehold land?
As a general rule, the burden of a positive covenant does not automatically run with freehold land in the same way as a restrictive covenant may do. This means a buyer is not always automatically bound by a previous owner’s positive promise simply because they buy the property.
What is an estate rentcharge?
In practice, positive covenants are often dealt with using legal mechanisms such as a deed of covenant, a chain of indemnity covenants, a leasehold structure, the benefit and burden principle, or an estate rentcharge. The right mechanism will depend on the property and the wording of the documents.
An estate rentcharge is commonly used on freehold estates to help enforce obligations or collect contributions towards the cost of services, maintenance, repair or insurance for the benefit of the land affected. This is often seen on modern housing estates, mixed-use developments and business parks where owners contribute towards shared roads, open spaces, lighting, landscaping or other communal areas.
Estate rentcharges can carry significant enforcement rights if sums are not paid or obligations are not complied with. Buyers should ask their solicitor to explain the amount payable, what services it covers, how the charge can increase, who controls the management arrangements, and what enforcement rights exist.
Covenants can affect how you use, alter, develop, sell or finance a property. They can matter whether you are buying a home, a shop, an office, an industrial unit, development land or an investment property. Some covenants are routine. Others can materially affect value or future plans.
Before exchange of contracts, buyers should understand:
• what covenants affect the property;
• who can enforce them;
• whether the seller has complied with them;
• whether consent, a deed of release, indemnity insurance or further investigation is needed; and
• whether the covenants affect the buyer’s intended use of the property.
Need advice on covenants affecting a property?
If you are buying, selling, refinancing or developing a property and the title refers to restrictive covenants, positive covenants or an estate rentcharge, Ellisons Solicitors can help. Our residential and commercial property teams can review the title, explain the practical effect in plain English and advise on the options available.
