What is a Restrictive Covenant?

Posted by Luke Hunt on 9th September 2019 -

A restrictive covenant is an agreement made by Deed between land owners which restricts the way land may be used and developed. It is usually imposed by the seller of the land who wishes to retain some control over what happens after the land is sold.

Before you purchase a property with Restrictive Covenants you should make sure you are aware which ones have an expiry date (if any) and which run into infinity and whether there have been any breaches of the restrictions.

The landowner can put any restrictions they want, as long as they are reasonable (for example it might restrict the future use of the land, or restrict the ability to build on the land or add to existing buildings).

If there is a breach of restrictive covenant, the landowner who benefits from the covenant can apply to the court for damages against the current owner of the (servient) land and, if successful the owner of the (servient) land could end up having to pay compensation.   If land that you own is subject to restrictive covenants and you considering carrying out work that would potentially breach the covenants, then it is advisable to get the dominant land owner to sign a deed of release which would release the land from the burden of the restrictive covenant.  It is likely that the dominant landowner would require some form of monetary compensation in order to provide the release.

If the property deeds are old or the land has been transferred and split multiple times it is sometimes hard to determine the beneficiary of the restrictive covenant. In circumstances like these the servient land owner would be advised to take out an indemnity policy.

An indemnity policy can protect you in case you breach a restrictive covenant. The price of the indemnity insurance would depend on the value of the property and the time in which you take out the policy. It’s important that you read it carefully and understand what it covers.  However, it should be noted that a standard indemnity policy will only cover prior breaches and not future breaches and is only a “litigation” tool.

For any property-related questions or queries do not hesitate to contact our Conveyancing team on 01202 877400.