Restrictive covenants are provisions in deeds that serve to limit the use of a property, or restrict what can be done with that property. This can relate to you or your neighbour; for instance, if the way they are using their property affects you. The obligation to observe restrictive covenants passes with the property, meaning that when the property is sold, the restrictive covenant remains in place and the new owner “inherits” the burden. There are implications if the restrictive covenant has been breached and in this article, breach of restrictive covenant remedies, we take a look at the process and mechanism involved.
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What are restrictive covenants?
Restrictive covenants are binding conditions that are written into a property’s deeds or contract by a seller to determine what a person can or cannot do with their house or land under particular circumstances. They can cover a wide range of issues, but the most commonly encountered include:
- Stopping a trade or business operating on the land
- Stopping buildings being built on the land
- Stopping alterations being made to a property
- Not to cause nuisance or annoyance to neighbours
- Limitations on the numbers or types of animals that can be kept on the land
- Not to park caravans or commercial vehicles on the land
Do restrictive covenants apply to all types of property?
Restrictive covenants can be placed on older properties as well as new builds and the age of the covenant doesn’t necessarily affect its validity.
However, in some cases, very old covenants are considered as unenforceable because the original landowner or builder cannot be traced because the wording is ambiguous and therefore difficult to apply or because the covenant has become historically obsolete.
Are restrictive covenants enforceable?
In general, restrictive covenants are automatically enforceable between the original parties involved. For subsequent successors in title (i.e. all owners after the original owner), matters are not quite so clear cut. Technically, under common law, the benefit of a restrictive covenant can pass to subsequent owners (successors in title), but the burden on the owner does not. Caselaw has, however, changed this, and there is now a requirement for successors in title to be bound by restrictive covenants. It is important to consider that not all restrictive covenants are enforceable. It is crucial to seek advice from an experienced solicitor as each case can be quite different. From the perspective of a burdened owner, enforceability depends on a range of factors including whether the covenant:
- is negative – positive covenants don’t typically run with the land
- correctly registered
- was taken to protect land that was retained by the original covenantee
- if there is a local authority involved – a local housing authority can enforce a covenant against a covenantor’s successor in title, even if the local authority does not hold an interest in the land benefitting from the covenant
- genuinely benefits land owned by the person seeking to enforce it
- the burden was meant to run with the land
- was correctly drafted/constructed – i.e. it is not ambiguous, future events were anticipated, it is possible to determine which land is subject to the restrictive covenant, and there is certainty that the covenant covers land and buildings.
What is a breach of restrictive covenant remedies?
If you breach a restrictive covenant, the person with the benefit of the restrictive covenant can demand payment for their retrospective consent to the breach or apply to the court for damages, which could result in you having to pay out a substantial amount in compensation.
The person with the benefit of the restrictive covenant could also seek injunctive relief which would stop you from carrying out work. For example, if the restrictive covenant states that you cannot build on the land and you start building an extension, an injunction would force you to cease all building work. If the building work has already been completed, the court could order for the extension to be demolished.
Damages for breach of covenant may be awarded under two distinct headings:
- for breach of the covenant on a contractual basis at common law
- or for breach of the covenant in equity in situations where damages are awarded in lieu of an injunction.
In practice, there is very little difference between the two, the only real difference being that a claim for damages on a contractual basis will be affected by the operation of the Limitation Act whereas damages in lieu of an injunction is a discretionary remedy.
There are three main principles to be borne in mind when assessing damages for breach of restrictive covenants:
- Irrespective of the positions of the parties, whether they are the original covenantees or successors, the principles governing an award of damages should be the same.
- Damages should be assessed on the basis of the usual rules relating to remoteness and causation.
- The starting point is that the damages should be assessed on the basis that they are compensatory in nature.
With regards to damages in lieu of an injunction, an injunction will be granted almost as a matter of course to restrain a breach of restrictive covenants. Where a defendant has wrongly interfered with the claimant’s rights as an owner of property and intends to continue that interference, then the claimant will be entitled to that injunction. There may be circumstances in which damages would be an adequate remedy but it is for the wrongdoer to satisfy the Court that those special circumstances exist.
What happens if the breach of covenant has existed for over 20 years without being challenged?
Generally, it is difficult to enforce a breach of covenant after 20 years. Every case is unique and it is advisable to use the services of an experienced solicitor to clarify the position.
In the event a restrictive covenant has been breached within the last 20 years, an indemnity policy can offer insurance-backed protection against the payment of damages, legal fees, demolishing and rebuilding, or any loss in value of the property. The price of indemnity insurance depends on the value of the property. It is vital however; that you read any indemnity policy in detail, to ensure it meets your demands and requirements.
Is it possible to remove a restrictive covenant?
If no insurance policy can be obtained, then owners could approach the person with the benefit of covenant in order to obtain ‘retrospective consent’ for work. If that person cannot be traced, refuses permission, seeks compensation for the breach or charges a fee which is prohibitive then an owner can apply to the Lands Chamber of the Upper Tribunal to modify or discharge restrictive covenants. However, this process can be both costly and time consuming with no guarantee of success. Even if you are successful, your costs will not be paid by the beneficiaries of the covenant. If their objection is successful, however, you may be forced to pay their costs.
How we can help
We have a proven track record of helping clients deal with breaches of restrictive covenant remedies. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Commercial Property Solicitors
It is important for you to be well informed about the issues and possible implications of breaching or enforcing a restrictive covenant. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
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