A restrictive covenant is an agreement that one party will limit the use of their land for the benefit of another’s land. This article will look at the different uses of restrictive covenants, who may be bound by them, the length of time that restrictive covenants may be enforced, how old restrictive covenants are treated by the law, and how breaches of restrictive covenants may be resolved.

Restrictive covenants may be used to:

• Limit uses of the land, e.g., for housing only
• Ban certain trades or businesses on the land
• Stop potential nuisances or activities on the land
• Limit the number of buildings being built on the land
• Restrict the height of buildings

A restrictive covenant is generally enforceable between the original parties as a matter of contract. However, if the covenant is too vague, ignores or undermines public policy, or the parties benefitted by the covenant give the benefit to a third party, the restrictive covenants may no longer be enforceable between the original parties.

Restrictive covenants may be binding on successors of both parties. However, this depends on several factors such as whether the covenant benefits the land owned by the party seeking to enforce it. Furthermore, the covenant should actually be restrictive in nature. Other factors include whether the covenant protects land that was retained by the original party benefitted by the covenant, and whether the benefit of the covenant passes to the party seeking to enforce it.

Is the land subject to a restrictive covenant?

Checking whether the land is subject to the burden of the restrictive covenant depends on when the restrictive covenant was created, and whether the land was registered or unregistered.

If a restrictive covenant was created before 1 January 1926, it should be discoverable on the abstract or epitome of title and/or title registers or other title documents.

If the restrictive covenant was created on registered land, then it is necessary to consider when it was created-

• Before 13 October 2003 – the restrictive covenant should have been protected as a minor interest at the time the covenant was given, by registration of a notice in the charges register of the burdened land.
• After 13 October 2003 – the restrictive covenant should have been protected by entry of a notice in the charges register of the burdened land. The person who is benefitted by the restrictive covenant can apply to the registrar for either an agreed notice, which requires the consent of the party whose land would be burdened, or unilateral notice, which can be made with or without the consent of the party whose land would be burdened. These notices would both prioritise the restrictive covenant against other registered interests made for valuable consideration.

Benefit of the restrictive covenant

If the benefiting land is unregistered, the benefit of the restrictive covenant cannot be registered, and so a deep analysis of the title deeds and enquiries will determine whether there is a benefit at all.

If the benefiting land is registered, the existence of the benefit may be noticeable through looking at the title documents of neighbouring properties, which may show whether their land is burdened by the restrictive covenants.

How can a breach of a restrictive covenant be resolved?

Where a restrictive covenant is breached, it may be possible to negotiate the release or vary the covenant, but this is only available if certain conditions are met, such as whether all the owners of the benefiting land are located, and if the proposed development or activity will breach the covenant.

Alternatively, indemnity insurance may be taken out in the event of a covenant being breached and is useful where the above conditions are not met. This may cover an indefinite period and can also cover successors in title and mortgagees of the policy holder. Indemnity insurance may be suitable where the covenant is old and can be more cost-effective than applying to the courts to release or vary the covenants.

Conclusion

Overall, restrictive covenants may be used in a range of ways including to limit the uses of land or restrict certain trades of business. Restrictive covenants generally bind the original parties to the contract and in limited circumstances, may be binding on successors of the land. It is harder for older restrictive covenants to be enforceable particularly if it was created before 1926. However, if the land is registered and the restrictive covenant is protected, then it is likely to be enforceable. A breach of a restrictive covenant can be resolved by applying to the courts to release or vary the covenant, or by taking out indemnity insurance.

If you have any questions about restrictive covenants, or any other matter related to buying or selling a home, please contact a member of our Residential Property team.