House with restrictive covenant: Experts weigh in on the pros and cons
Title Checks and Restrictive Covenants: What Homebuyers Need to Know
When buying a property, it's essential to be aware of any restrictions that may limit what you can do with the land. These restrictions are known as restrictive covenants.
Restrictive covenants are legal obligations that regulate the appearance and use of a property. They can be found in the registered title at the Land Registry and are an inexpensive way to check for restrictions. Common types of restrictive covenants include limitations on building and land use, such as prohibitions against constructing certain structures, restricting extensions or modifications, forbidding commercial or business uses, and controlling fences, parking, or keeping animals.
These covenants are contractual obligations that run with the land, meaning they bind current and future owners. As such, it's crucial for prospective buyers to review them carefully before purchase. Failure to do so could lead to legal action if a breach occurs.
The impact of a restrictive covenant on a property's value depends on the specific restrictions in place. For example, if a covenant forbids the installation of large structures like garden buildings or satellite dishes, it may reduce the property's saleability. Similarly, restrictions on commercial use or the renting of the property could impact its appeal to potential buyers.
In some cases, restrictive covenants can be lengthy and expensive to remove. However, if a covenant is found to be unreasonable or if it conflicts with other legal obligations such as planning laws, it can be challenged or overturned with legal help.
If you're the owner of a property with a restrictive covenant and you wish to remove or vary it, you'll need the consent of the person who put it in place or their successor. In some cases, this might not be possible, and a court application may be necessary.
It's also important to note that some mortgage lenders may be wary of lending on a property with very strict covenants. To secure a mortgage or minimize risks, indemnity insurance can be taken out.
Before exchanging contracts, a report on title, provided by a solicitor, should detail any restrictive covenants and their potential risks. By being aware of these covenants and understanding their implications, homebuyers can make informed decisions and avoid costly surprises down the line.
| Type of Restrictive Covenant | Examples | Potential Impacts | |--------------------------------------|------------------------------------------------|-----------------------------------------------------| | Building restrictions | Limits on construction, extensions, modifications | Limits property development and changes | | Use restrictions | No commercial use, no certain activities | Restricts types of allowed activities or businesses | | Appearance and maintenance restrictions | Fences, parking, keeping animals | Controls aesthetics and land use | | Binding effect | Runs with the land, applies to future owners | Long-term limitations on property |
[1] Land Registry. (n.d.). Restrictive covenants. Retrieved from https://www.gov.uk/guidance/restrictive-covenants-on-land-registered-with-the-land-registry
[2] Law Society. (n.d.). Restrictive covenants. Retrieved from https://www.lawsociety.org.uk/topics/residential/buying/restrictive-covenants
[5] Citizens Advice. (n.d.). Restrictive covenants. Retrieved from https://www.citizensadvice.org.uk/housing/owning-a-home/problems-with-your-home/problems-with-neighbours/restrictive-covenants/
- In the process of buying a property, it's crucial to check for restrictive covenants that may limit your plans for the land and home.
- Restrictive covenants are legal obligations found in the registered title at the Land Registry, outlining restrictions on building, land use, appearances, and maintenance.
- Common types of restrictive covenants include prohibitions against constructing solar panels on the roof, extending the loft, or altering the home's design.
- Ignoring these covenants could lead to legal action and costly surprises down the line, so carefully review them before investing in real-estate.
- It's essential to understand that restrictive covenants can impact home financing, as some mortgage lenders may be wary of lending on properties with very strict covenants.
- To secure a mortgage or minimize risks, indemnity insurance can be taken out to cover any potential issues related to the restrictive covenants.
- Before exchanging contracts, a solicitor's report on title should detail any restrictive covenants, guiding you on their potential risks and implications for your property project's costs and future plans.
