Considering the purchase of a property with a restrictive covenant? Hear from the professionals on their opinions.
In the world of real estate, restrictive covenants are legal restrictions that regulate the use or appearance of a property. These covenants can significantly impact property use and development, and it is crucial for homebuyers and developers to understand them.
Restrictive covenants are often imposed by developers or previous landowners to maintain neighborhood uniformity, protect property values, preserve sightlines or access, and prevent activities that might disturb neighbors. Common examples of such covenants include prohibitions or limits on building extensions, using the property for business or commercial purposes, keeping specific animals, altering the external appearance of the property, and using the land for anything other than a private residential dwelling.
These covenants can affect property use by limiting owners’ ability to modify, develop, or use their land as they wish, even if planning permission from local authorities is obtained. For instance, you could get official approval for an extension but still breach a restrictive covenant and face legal action. It is important to note that these covenants generally "run with the land," meaning they bind not just the original owner but also successive owners unless formally removed or modified by agreement or court order.
The presence of a restrictive covenant might devalue a house if it forbids extending the house or the erection of anything on the roof, making the property unattractive to potential buyers. On the other hand, some restrictive covenants forbid the installation of large structures, like garden buildings, or smaller items like security cameras or satellite dishes.
Before purchasing a property with a restrictive covenant, it is advisable to seek independent legal advice from a SRA registered legal professional. A report on title, provided by a solicitor before the exchange and completion of a land or property purchase, details any existing restrictive covenants. A title check can be done before this stage by looking at the registered title at the Land Registry, which is an inexpensive way to see any restrictions on the property.
In some cases, indemnity insurance can be taken out to secure a mortgage or to minimize risks when buying a property with a restrictive covenant. The cost of indemnity insurance is usually a couple of hundred pounds.
If the person who put the covenant in place cannot be found, or there is a dispute, a court application can be made to the Upper Land Tribunal. However, it is essential to note that this process can be lengthy and expensive, and is not normally considered worth the trouble.
Restrictive covenants can also limit the parking of commercial vehicles, a boat, or caravan on the driveway, which is common with leasehold properties. Furthermore, these restrictions might prevent the operation of certain businesses from the house or the renting out of the property.
In conclusion, understanding restrictive covenants is crucial when buying or developing a property. These covenants can complicate resale value and future development opportunities, and it is essential to conduct thorough due diligence before purchasing or developing a property with such covenants. Always consult a legal professional for advice specific to your situation.
- Developers or previous landowners often impose restrictive covenants to maintain neighborhood uniformity and preserve property values, which can significantly regulate the use or appearance of a property.
- Common examples of restrictive covenants include prohibitions or limits on building extensions, using the property for business or commercial purposes, keeping specific animals, altering the external appearance of the property, and using the land for anything other than a private residential dwelling.
- It is important to note that restrictive covenants generally "run with the land," meaning they bind not just the original owner but also successive owners unless formally removed or modified by agreement or court order.
- The presence of a restrictive covenant might devalue a house if it forbids extending the house or the erection of anything on the roof, making the property unattractive to potential buyers.
- Before purchasing a property with a restrictive covenant, seeking independent legal advice from a SRA registered legal professional is advisable, as a title check can be done before the exchange and completion of a land or property purchase to see any restrictions on the property.
- In some cases, indemnity insurance can be taken out to secure a mortgage or to minimize risks when buying a property with a restrictive covenant, with the cost of indemnity insurance typically a couple of hundred pounds.
- If the person who put the covenant in place cannot be found, or there is a dispute, a court application can be made to the Upper Land Tribunal, but this process can be lengthy and expensive and is not normally considered worth the trouble.
