What is a restrictive covenant? A restrictive covenant is typically a clause in a deed or a lease to property, that imposes a restriction on the use of the land or the lease, irrespective of the owner. In many cases it also allows the surrounding properties, who have similar restrictive covenants, to enforce their restrictions (covenants) in court.
The issue of enforcing a restrictive covenant was under the microscope in the case of Doberman v Watson. Here's what happened:
This case concerned a restrictive covenant imposed by a conveyance of land in 1954. It was registered against the land’s title and it prevented the construction of anything other than a private dwelling house upon the land. In 1978, a former owner had unsuccessfully applied for the covenant to be discharged or modified.
The current owners of the land wanted to construct an additional building. They applied to court for a declaration that the restrictive covenant did not affect the land. They claimed that the restriction was only a personal covenant and, as the land and surrounding property had changed owners, the covenant was now unenforceable.
In order for the current owners of the surrounding property to enforce the covenant, they had to prove that the benefit of the covenant had passed to them in one of three possible ways:
- by a chain of express assignments in subsequent transfers of the property;
- by the benefit of the covenant being attached to the surrounding property; or
- by way of a building scheme.
It was held that there had been no express assignment of the benefit of the restrictive covenant.
Appropriation of the benefit of a covenant to surrounding property does not apply to land in a development that has already been sold on. In this case, the land that was the subject of the covenant had been sold late in the disposal process, meaning that the benefit of the covenant did not pass to the surrounding land. Furthermore, the documentation did not sufficiently define the land that was to benefit from the covenant.
So was there a building scheme in existence? This overcomes issues caused by the order in which plots are sold by providing that covenants are mutually enforceable by all parties to the scheme. There must be a clear intention to create mutually enforceable covenants in the interests of the buyers of the plots of land and their successors in title. The area covered by the scheme must be clearly defined and known to all plot owners.
The 1954 conveyance stated that the covenant was to 'benefit and protect the Vendor's building estate', but there was no other evidence of a building scheme. There was no plan or explanation regarding the scheme, and no defined area in which the scheme would operate.
Therefore the owners of the surrounding land could not enforce the covenant and a declaration was granted that it did not affect the owners' land.
It is vital to check the title at an early stage of site investigations to identify whether there are any restrictive covenants which would impact on the viability of a proposed development. Title insurance is unlikely to be available where the restrictive covenant, and its beneficiaries, are well-known in the local area.
It may be possible to negotiate a release of a restrictive covenant, although it can be difficult to establish which land benefits from a covenant. HM Land Registry does not usually note the benefit of a covenant on the title registers. Where a covenant is historic, it may be necessary to locate the document that created the covenant, or to order the title registers of the land that is affected by the covenant, to check whether there is any indication as to the benefitting land.
Although there are statutory procedures to assist in the removal or interpretation of restrictive covenants, this case reveals the delays that can be caused given the owners' original application for a declaration was submitted in July 2015. Some two years later, they are now able to proceed with the development.
You're on our blog and updates site, which is hosted by elXtr, a leading digital hub powered by the award-winning lawyers at LHS Solicitors LLP, bringing you real law, made easy.
Find out more about elXtr here.
The burden of a restrictive covenant runs with the land provided it is annexed to the land which it was intended to benefit and successors in title will be bound by it. However, the fact that there is a restrictive covenant recorded against the title does not necessarily mean that it will prevent the development.