Thursday, 29 September 2011

Restrictive Covenants: They Won't Just Go Away

Sometimes a landowner can’t develop a piece of land or change its use without first getting someone else’s consent, because there’s a restrictive covenant on the title.

Restrictive covenants “run with the land” and so bind all future owners and are effective provided there is land defined in the covenant which benefits from it.

I have written before about the problems that can arise from these covenants, for example what happens when the person whose consent you need is dead; and the introduction of competition law into the mix.

The law relating to restrictive covenants in general is old and complex, and the limited methods and opportunities that exist for modifying or removing them are unsatisfactory – as recognised by the Law Commission which has proposed reform which may eventually become law – see my June post Law Commission Blows the Cobwebs Out of Land Law – and the government is currently conducting a consultation on the use of restrictive covenants in the pub industry.

Quite often developers or landowners will go to the expense of getting planning permission before they have dealt with a covenant on the title which prohibits want they want to do.

This can be an expensive mistake.

Getting rid of covenants is not straightforward.

If the covenant holder won't negotiate or can't be found, you have to apply to the Upper Tribunal Lands Chamber (which used to be more memorably called the Lands Tribunal). The tribunal has powers under section 84 of the Law of Property Act 1925 to modify restrictive covenants or discharge them completely, which removes them from the title.

The rules that govern these applications are too complex to set out here, but basically amount to the tribunal having to balance the interests of the person applying for removal of the covenant and those of the person who has the benefit of it.

Recent cases have shown that the tribunal will not just consider the ultimate use of the land that is being proposed, but also any disturbance in the short term that might be caused by the construction works.

Whether or not the tribunal will take that disturbance into consideration depends on the specific facts of each case.

So for example, in a recent case before the tribunal (Perkins [2011] UKUT 219 (LC)), the tribunal refused to modify a restrictive covenant to allow a developer to build a new house on his land, and that refusal was based on the disturbance likely to be caused to the neighbourhood during the construction works.  

The people who had the benefit of the covenant said that the roads were too narrow for construction traffic and that parking in the immediate area was already a problem. The development site was situated around a square, and the lorries would have to negotiate two sides of it, which could potentially cause damage to parked cars, verges and planting on the square. The tribunal therefore decided that “the facts of this case are exceptional in terms of potential disturbance, and do justify giving special weight to this factor” and refused the application to modify the covenant.

So the tribunal will take account of whether one of the purposes of the covenant is to protect holders of the covenant from intolerable nuisances during a period of construction, and not just look at the proposed end use.

The lesson here is to scrutinise the land’s title right at the outset, even before applying for planning permission, to find out whether there are any restrictive covenants and, if there are, to consider their wording carefully with your advisers.

1 comment:

  1. It is also true that usually if a breach of covenant continues for 25 years or more with no objection by the person with the benefit, that person is deemed to have accepted the breach by implication and no longer has the right to enforce the covenant.