Purchasing a property is stressful at the best of times, but buyers of freehold land are often shocked when they find out that their property is subject to restrictive covenants imposed by previous owners.

Many freehold properties are subject to these restrictions, confusing purchasers who expect to buy the land and buildings outright, ‘free from incumbrances’. However, thanks to the evolution of land law over the years, buyers are at risk as owners are able to transfer land subject to any of a variety of rights, restrictions, obligations and even charges.

The limitations caused by restrictive covenants often mean that a simple course of action, such as extending a building on freehold land, can be costly if the property is subject to a covenant requiring consent for alterations and additions.

Certain covenants are ongoing, for example the restriction could state that land should be used for one dwelling house only, so if developing the land was the intention, this would be in breach of the restriction.

It is vital to check title deeds before signing any contracts. A purchaser’s first step should be to visit a solicitor so they can review the deeds and identify any covenants, and consider the wording and context of the covenant to check whether it is valid and enforceable.

Problems can arise when the covenant appears valid and enforceable and the buyer’s intended use of the property will put him in breach. It is important to be aware that this can be the case even if planning permission has been granted for the intended use. However, if such a restrictive covenant is in place, solving it isn’t always just a case of reaching for the cheque book.

Depending on the age of the covenant and the parties to the deed that created it, one option is to go ahead and breach (or carry on breaching) the covenant without making enquiries of or alerting the person who has the benefit of the covenant. Clearly there is risk involved in such a strategy. The most common protection if choosing such a strategy is to put in place restrictive covenant indemnity insurance, often for a modest premium.

Alternative strategies include seeking the consent of the party benefiting from the covenant, or applying to the Lands Tribunal or Courts for discharge or modification of the covenant. Both can be costly, especially as success with an application cannot be guaranteed. The age of the covenant and any change in the character of the neighbourhood since the covenant was imposed are factors that may be taken into consideration in an application. Bear in mind that indemnity insurance will almost certainly no longer be an option once the party benefiting from the covenant is aware of the breach or potential breach.

The issues involved with restrictive covenants are often technical and complicated, so it is crucial to seek legal advice at an early stage.

For further assistance please email John Tuson on jtuson@kirwanssolicitors.co.uk.