<sigh> Restrictive Covenant on Forever Home

[sophienextdoor]

Wasn’t sure whether to post this on the legal section or here. Anyway, myself, DH and DD have found our forever home, a beautiful period villa in Southampton.

To cut a long story short the searches have returned a restrictive covenant which states.

“WITH the intent of binding himself and successors in title the Purchaser HEREBY COVENANTS with the vendor for the benefit if the land namely:

(iv) That he will not make or cause to be made any alterations to the existing dwellinghouse and buildings without the Vendors’ previous consent in writing and will pay the Vendors’ fee for approval of plans for such alterations.”

The covenant is dated 1979 and from what I can see the original vendor (a company) has now dissolved sometime in the 90’s.

I’m so confused!! Does this mean we cannot change anything inside the house?

We want to completely change the layout inside and need to move nearly all the walls, it will definitely require planning permission but we had already made considerations for that.

Feeling a little heartbroken and deflated with all this.

Can anyone offer any advice and confirm the covenant is as “literal” as it reads?? Or does anyone have experience with a similar issue?

*This is my first post, so Hi!

You need

I would not buy the house with that covenant. If it's easy to remove then the vendor needs to go through that procedure before selling it.

In fact getting it removed would significantly increase the value I would say (or the covenant reduces the value, which comes down to the same thing). The fact that they have not had it removed before putting the house on the market suggests to me that it is not going to be easy.

To answer a few of your comments -

@Gregwiggle
I understand some people simply ignore existing covenants (especially where the original landowner is deceased or company dissolved) but I’m not keen on this option. I fear a time in the future where the council might take ownership of these covenants and enforce them to make money. Not so dissimilar to how people committed crimes 40 years ago, then DNA technology was invented and they were punished retrospectively.

@StupidNC
I think the Land Registry details for £3 will only show the current landowner, not the original landowner who drew up the covenants.

@tanstaafl
We will need to move some windows so planning permission will definitely be required.

@MurielSpriggs
The vendor is quite old and has lost interest in the property, let it get quite derelict. But yes, I’m really not sure we will be going ahead with this after the solicitor’s recent response I attached in my last post.

I’ve downloaded land registry details in the past and they showed everything. Even as far back as the initial plans for building on what was farmland about 100yrs ago. It’s worth £3 to find out if yours do, surely?

@sophienextdoor
The benefit of the covenant runs with the land so you need to know who currently has the benefit of it.
I'm sorry, what you paid for their advice is about right.
You could go back and pay more for them to find out who that is, but bear in mind that could render an indemnity policy out of the question.
Tbh the seller needs to fix this, either by having it removed, agreeing to a retention of the purchase price by you until you have it fixed (which the mortgage lenders will not like), or by offering you an indemnity policy with the house (which your mortgage lender will have to be happy with).

Why do you need planning permission to move some windows? Is the property listed?

The starting point is to get a copy of the 1979 conveyance from the Land Registry to find out which land benefits from the covenant - it may set this out in words or it may be shown on a plan. Alternatively an extract may be set out in the title register, possibly with a note clarifying where the benefiting land is.

I would do the work you want to do anyway on the basis that the ‘ person’ who can enforce the covenant , ie the company, is dissolved and therefore won’t find out you’ve done anything and doesn’t exist anymore and therefore can’t enforce the covenant.

Actually, scrap that, I think I’m wrong. I guess when the now dissolved company sold the subservient land, the benefit of the covenant would go to the new owner of the subservient land so perhaps is enforceable.

Just to add to my post above, it may not be possible to identify the benefiting land, or some further detective work may be required if it says, for example, that the benefiting land is the land owned by the vendor at that time (i.e. in 1979).

I’m not a lawyer but I would ignore it and get an indemnity policy - I doubt anyone is going to enforce it. I don’t think most restrictive covenants are ever enforced. There is one on my house except we don’t even know what it is because the paperwork from 1885 was lost, all we know is that there theoretically is one!

No, you haven't been 'ripped off'! That £320 may have saved you many thousands if you'd have ignored the covenant and been sued as a result. You aren't just paying for the paragraph; you're paying for the years of education and training your solicitor has gone through, the costs of keeping them in practice to give the advice, the insurance cover they have to take out so you can sue them if they've got it wrong... money well spent I'd say

The covenant on ours was put on by the estate which owned the land. I probably wouldn't want to just ignore it either, but as it's so old there must be a way of getting round it legally because people here seem to. Just to add that I work for the council and think it's incredibly unlikely that they would take on a convenant (or be able to) belonging to a private owner and enforce it. Apart from anything else nobody in my office can access any records since before the last IT system change without the biggest admin headache ever!

@Pravi321

Actually, scrap that, I think I’m wrong. I guess when the now dissolved company sold the subservient land, the benefit of the covenant would go to the new owner of the subservient land so perhaps is enforceable.

I think you're talking about the dominant land (or tenement) not subservient - it's all rather kinky.

The covenant was an asset of the original owning company. Just because the company has been dissolved doesn't mean that its assets and rights have disappeared in a puff of smoke.

What actually happened could depend on the background to the dissolution. If there was an insolvent liquidation, then a liquidator could have sold the covenants to someone else. If there was a solvent liquidation then the covenants could have gone back to the original shareholders.

But I agree with a pp, tracing the current covenant owners would cost a lot more than £320.

The changes you are wanting to make seem to be so drastic that they must end up being a major added value to the house. You'd live there dreading a knock on the door or a letter in the post every day.

If there was an insolvent liquidation, then a liquidator could have sold the covenants to someone else. If there was a solvent liquidation then the covenants could have gone back to the original shareholders.

They run with the land. They now benefit the current owner. They can't be separately assigned to someone else.

I understand now why everyone says buying a house is so stressful! Ugh!

What I can’t understand why the records for the covenant owners aren’t better kept. I mean, if we knew who was the land owner we would approach them and be happy to pay the fees to get this signed off properly so that everything is kosher.

Is there no register of this I can find online?

@PattyPan
Re. Taking out indemnity insurance, I read somewhere online that this is not possible to get if you are requiring planning permission on the property. So I think this could be an issue.

@thecognoscenti
I understand but I just thought the solicitor would have provided a more concrete answer. I went in saying I’m concerned about the covenant, and their summary statement says ‘I fear the covenant could be an issue’. No attempt to find out who is the landowner. No advice to say that it could be possible if we got all of the neighbors to sign off our plans. Just the same information I have found online really.

Come to think of it, the solicitor says:

The company which has the benefit of the restrictive covenant has dissolved but the benefit of the covenant runs with the land so technically the current land owner – of the land benefitting from the covenant (possibly the neighbours).

So does this mean we just ask the current land owner (who we are purchasing the property from), for his permission??

No @sophienextdoor the benefit of the covenant runs with the land that originally had the benefit of it. It doesn't belong to the seller of your house.
It belongs to whoever owns the land that the covenant was created to protect.
Probably a sale of part.
Someone sold half their garden to be built on but wanted to make sure what was built didn't inconvenience them. The covenant means the plot couldn't change from a villa to a tower block (planning permission ignored for the sake of the example) without them giving permission.

What I can’t understand why the records for the covenant owners aren’t better kept. I mean, if we knew who was the land owner we would approach them and be happy to pay the fees to get this signed off properly so that everything is kosher.

Is there no register of this I can find online?

The land register!

I'm no land lawyer either, but the entry in the register should (I believe) be a transcription of the original covenant, which should identify which land has the benefit of the covenant. If you post the full Land Registry entry with confidential details expunged someone might be able to decipher it.

You just need to go to a decent lawyer or land surveyor. I specialise in agricultural land but I’d recommend Burges Salmon.

@sophienextdoor The solicitors gave you pretty honest advice… Its just not what you wanted to hear. What you intend to do would likely be a breach, as you thought.

The covenant runs with the land that originally had the benefit of it - eg, whomever it was put in place to protect; as a PP said - and potentially the neighbours. It’s not as simple as it being the current landowner or dying with the old company, sadly, and it’ll cost a decent amount more than that to trace them.

There’s also the possibility that they won’t allow permission, or that the costs would be prohibitive…

You could go back and enquire about costs to trace and contact the covenant beneficiaries, and if they have any idea of potential costs… they might not.

Or you can get the land registry record and someone will be able to decipher it for you and tell you what land has the benefits, so you can contact the owners.

@MurielSpriggs it's not always on the Land Registry! Picture attached of what it says on the register for my house.

Covenants are a notoriously complex area and the enforceability of a covenant will depend on construction of the covenant wording and the court’s view on the commercial purpose behind the consent provision in the covenant.

Without seeing a complete copy of the title, in the absence of words indicating that the consent may be given by the original vendor’s successors in title, the granting of consent has been regarded as personal to the original party. (Wrotham Park v Parkside Homes (1974)).

That the original vendor company is no longer in existence is likely to lead to the conclusion that the provision is no longer capable of being exercised i.e consent for alterations not required. This is not definite, but is likely if the words ‘and their successors in title’ do not appear after the word ‘vendor’.

Each case will turn on its own facts and as you have found £320 to be steep for specialist advice, I doubt you will want to spend £3-£4K getting a counsel’s opinion!

You can get bespoke indemnity cover to cover future works, including works that need planning permission etc. Ask your solicitor about that. The indemnity insurance provider will likely have a couple of queries but they will be straightforward. The cost of the policy will depend on how risky the insurer considers your proposed alterations to be and also how high you want the level of cover to be.

It’s not a deal breaker provided you get sensible advice from professionals and not a conveyancing factory.

A restrictive covenant is not a defect on the title. I wouldn’t expect a seller to contribute towards the cost of a policy for work that you want to carry out.

Good luck.

Oh and if you do ever want indemnity policy cover, you can’t attempt to contact any third party connected to the covenant. No insurer will touch it if you’ve done that.

Interesting @PattyPan, I wonder how they knew about the covenant if they didn't see the conveyance.