Most properties are subject to one or more restrictive covenants, which purport to restrict what can and can’t be done with the property.
When a property owner (commercial or residential) wants to change the use of, or alter a property, their first thought is usually that planning permission will be needed. In addition, the deeds to the property should always be checked to see if there are any covenants that would restrict the proposed development. When considering whether to grant planning permission the Council will have no regard for restrictive covenants and the grant of planning permission does not relieve a property owner from liability to the persons with the benefit of a covenant if the development breaches the covenant.
If a covenant does affect a proposed development there are a number of ways in which the potential issue can be resolved. You should first consult a solicitor to check that the covenant is valid and subsisting, and that its wording does affect the proposed development. There are a number of grounds upon which a covenant could be unenforceable including if it is ambiguous, contrary to competition law, or contrary to public policy, for example, by contravening anti-discrimination laws.
Further, the covenant must ‘touch and concern’ land owned by the person seeking to enforce the covenant. This isn’t a straightforward matter of whether the land is adjacent, but it is an important means of potentially challenging a covenant.
If a restrictive covenant is valid and enforceable it can still be dealt with in a number of ways which include:
- A deed of release with the person entitled to the benefit
- Indemnity insurance against breach
- An application to the Lands Tribunal to have the covenant modified or discharged
- Obtaining a Court declaration as to the enforceability of the covenant
If none of the above are practical options, then you may decide to proceed with the proposed development notwithstanding the presence of the covenant. This should only be done having sought the advice from a property solicitor on the risks involved in doing so, bearing in mind the potential remedies available to the person entitled to the benefit of the covenant. In some cases a developer will make a judgement that the possible remedies available to a person with the benefit of a covenant are not so severe in the circumstances as to warrant not proceeding with the proposed development.
If you need any advice on restrictive covenants in relation to a property development, or indeed any other property advice, please do not hesitate to get in contact with our team of experts. Call our commercial property team today on 0845 287 0939 or contact us by email.
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