When buying a property, most people focus on the location, size, and condition. But beneath the surface, the legal title may contain restrictive covenants that could significantly affect how you use and enjoy your new home.
What Are Restrictive Covenants?
Restrictive covenants are legally enforceable conditions placed on land, usually recorded in the schedule of restrictive covenants noted on the Charges Register to the title or in a Conveyance and Transfer Deed. These covenants run with the land, meaning they apply to all future owners, not just the original party who agreed to them.
Their purpose is to preserve the character or value of an area by preventing certain actions.
Common restrictions include:
- Not building extensions or outbuildings without consent
- Not using the property for business purposes
- Not parking commercial vehicles or caravans on the driveway
- Not hanging laundry where it can be seen from the road
In some cases, restrictive covenants specifically prohibit the use of the property for business purposes. For example, you may be prevented from operating a liquor store, takeaway shop, garage, or other commercial company from your home. These restrictions are typically put in place to preserve the residential character of the area and avoid disturbances to neighbouring properties. It’s essential to be aware of this if you plan to run a business from home, as consent may be required.
You will need to note that these covenants don’t disappear with a change in ownership. They are intended to bind every successor in title and simply prevent you from doing things at the property without consent from the original covenantees.
How Will Your Solicitor Make You Aware?
Before you’re legally bound by these restrictions on completion, your solicitor will review the covenants carefully and include a summary in your report on title. They will also raise enquiries with the seller’s solicitor to confirm that there have been no breaches of these covenants, either by the current owner or any previous owner.
If it appears that there may have been a breach, for example, a conservatory added without consent this will need to be addressed before you proceed. Your solicitor will advise on whether further action is needed, which could include obtaining retrospective consent or taking out indemnity insurance.
What If There Has Been a Breach?
If a restrictive covenant has been breached, the risk is that the beneficiary often the original landowner or estate developer could enforce the covenant, requiring the breach to be remedied or even seek damages.
To protect you, your solicitor may recommend purchasing a Restrictive Covenant Indemnity Policy. This is a type of legal expenses insurance that protects you against enforcement action relating to past breaches.
- The cost of the policy will be advised on your report on title and will depend on the value of the property and the nature of the breach
- It is a one- off payment, typically made on completion
- The policy is also assignable to successors in title, so it continues to offer protection if you decide to sell the property in the future
Your solicitor will confirm the exact cost of the policy, should you wish to proceed. In many cases, this offers a practical way to move forward without delay or risk.
However, in light of the fact that this Deed is over 100 years old, you may wish to take a view on this point particularly if no one has sought to enforce the covenant during that time.
Why Awareness of Covenants Matters Before You Buy
Restrictive covenants aren’t just legal jargon they can have real implications for your use of the property. Always read them carefully, and don’t be afraid to ask questions.
Your solicitor is there to guide you through the process, highlight any potential issues, raise the necessary enquiries, and suggest solutions where appropriate ensuring you know exactly what you’re signing up for before exchange of contracts.
Understanding your obligations at this stage can save you stress and expense down the line and ensure your dream home doesn’t come with hidden restrictions.
Caroline Davindrarajan is an experienced Residential Property Professional who works with Jeremy Galman, Director, as a member of his specialist.
Contact us to see how we can assist using our Enquiries page on our website or call 020 7387 2032.