Restrictive Covenants and the Development of Land

It is often wrongly assumed that the grant of planning permission removes any further barriers from development progress. One must also consider the impact of any restrictive covenants on the land, which exist outside the realm of planning law and in the more intricate aspects of private land law.

Even if planning permission is granted, which is to say the local authority have merely validated the application for development and approved it having conducted their consultations, they will not be aware of any private restrictions that may exist on the owner’s title to the land. Indeed, a valid and enforceable restrictive covenant may inhibit any further progress to development or, in certain cases, completely remove the option for development entirely.

What is a restrictive covenant?

It’s in most basic sense a “covenant” is a legal promise given by one party to another. A restrictive covenant in land applies to the land itself and continues to bind the land indefinitely until it is released, discharged or modified.

For example, a landowner may decide to sell off part of their land to a third party. As part of the original sale, the landowner may require certain restrictions to be placed on the land which is to be sold. A common example is restrictions on certain types of development or alteration to the land. In order to acquire the land, the buyer must then accept that a covenant will be placed on their land and they will be unable to carry out development or alteration, either entirely, or, in some cases, without the prior consent of the adjoining landowner who sold them the land. This covenant will then bind successors in title to the land upon any future sale.

Remember: the covenant binds the land, not the landowner.

Can it really stop me building or developing on my own land?

Yes, it can.

Even though planning permission has been granted, it does not override any restrictive covenants. The two are not mutually exclusive, they are entirely independent of one another.

Any prudent developer should investigate title before the commit to the planning process.

Is there a way around this?

Yes, there is.

Whilst planning permission does not override a restrictive covenant, it’s existence can be used as a negotiating tool with the adjacent landowner, particularly if you simply require their consent. If you can show that proper attention has been given to the proposed development (which is apparent from the planning documents), the benefitting landowner may only be too please to give their consent. However, this may not apply if there is an outright prohibition on development.

What are my other options?

There are several ways to deal with the issue of a restrictive covenant which may otherwise impede development of land:

  1. If you are aware which land enjoys the benefit of the restrictive covenant (usually this will be a neighbour which directly abuts your land), then you can look to approach the landowner for consent (if required). Alternatively, if the restrictive covenant provides for an outright prohibition on development (i.e. consent is not required because not development is permitted whatsoever), then you can ask the landowner if they would agree to formally release the covenant over your land by way of a Deed of Release of Restrictive Covenant. This is a formal deed which will be completed by the parties and registered at the Land Registry to ensure any record of the covenant is appropriately addressed. The Land Registry do not tend to remove the existence of the covenant from the title, they will merely include a note to say that the covenant has been modified or discharged in accordance with the new deed. This is then apparent to future purchasers. The landowner will likely wish to take advice on the matter and demand a fee for agreeing to the release. The  fee is a payment made to the landowner upon completion and may be a fixed fee, or a percentage in the uplift of your land once developed. This will be a point for negotiation.

 

  1. If the landowner does not agree to release the covenant, which they are not generally obliged to, then you are not without recourse. You may be able to apply to the Upper Tribunal (Lands Chamber) to have the covenant discharged or modified. Please note the Upper Tribunal (Lands Chamber) does not have the legal power to discharge or modify all covenants, so taking early advice is necessary as the process can costly and protracted. The covenant will be assessed according to a strict criterion to see if it is capable of being modified or discharge entirely.

 

  1. If you proceed with the development without seeking a formal release or applying for it be modified or discharged by the Upper Tribunal, you will need to seek other another option. Depending on the circumstances, you may wish to consider the option of taking out an indemnity policy which will cover the risk of the benefiting landowner coming forward at a later date, upon discovering the breach, and seeking to exercise their rights.

You should be aware that an indemnity policy merely insures against the risk of the breach being discovered, it does not remove the covenant or the breach itself.

There will also be many caveats attached the policy. For example, it is unlikely that the risk can be insured against if you have already approached the landowner and asked for a release, or if they are aware of the development.

That said, an indemnity policy is sometimes the preferred solution if the covenant is incredibly old and there is no past knowledge of the covenant being enforced previously. Equally, if you are unable to establish from investigations of your own title (and surrounding titles), the land which has the benefit of the covenant, then an indemnity policy may be more suitable.

Hart Reade Solicitors are a full-service law firm with offices in  Eastbourne, Hailsham, Polegate and Meads.  We hold both Lexcel and Conveyancing Quality Accreditation from the Law Society of England and Wales, as well as being an ALEP member.  To make an appointment with one of our commercial property Solicitors, please phone our office on 01323 727 321.

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