A challenge for restrictive covenants

A challenge for restrictive covenants

Published:

Author: Emily Danson & Claire Byrne

Applies to: England and Wales

A recent case demonstrates that a restrictive covenant is not necessarily a barrier to development of land.

Facts

Doberman v Watson concerned a restrictive covenant imposed by a conveyance of land in 1954. It was registered against the title to the land and it prevented the construction on it of anything other than a private dwellinghouse. In 1978, a former owner had unsuccessfully applied for the covenant to be discharged or modified.

The current owners of the land wished to construct an additional building. They used a different statutory process to apply to court for a declaration that the restrictive covenant did not affect the land. They claimed that the restriction was only a personal covenant and, because the land and surrounding property had changed hands, it was now unenforceable.

The law

In order for the current owners of the surrounding property to enforce the covenant, they had to prove that the benefit of the covenant had passed to them in one of three possible ways:

  • by a chain of express assignments in subsequent transfers of the property;
  • by the benefit of the covenant being annexed to the surrounding property; or
  • by way of a building scheme.

Decision

There had been no express assignment of the benefit of the restrictive covenant.

Annexation of the benefit of a covenant to surrounding property does not apply to land in a development that has already been sold off. In this case, the land that was subject to the covenant had been sold late in the disposal process, meaning that the benefit of the covenant did not pass to much of the surrounding land. Moreover, the documentation did not sufficiently define the land that was to benefit from the covenant.

This left the question of whether there was a building scheme. A building scheme overcomes issues caused by the order in which plots are sold by providing that covenants are mutually enforceable by all parties in the scheme. For a building scheme to exist, there must be a clear intention to create mutually enforceable covenants in the interests of the buyers of the plots of land and their successors in title. The area covered by the scheme must be clearly defined and known to all plot owners.

The 1954 conveyance stated that the covenant was to 'benefit and protect the Vendor's building estate', but there was no other evidence of a building scheme. There was no plan or explanation regarding the scheme, and no defined area for the scheme to operate within.

Therefore the owners of the surrounding land could not enforce the covenant, and a declaration was granted that it did not affect the owners' land.

Comment

It is essential to check the title at an early stage of site investigations to identify whether there are any restrictive covenants which would impact on the viability of the proposed development. Title insurance is unlikely to be available where the restrictive covenant, and its beneficiaries, are well known in the local area.

It may be possible to negotiate a release of a restrictive covenant, although it can be difficult to establish which land benefits from a covenant. The Land Registry does not usually note the benefit of a covenant in the registers of title, although it might in the case of a building scheme. Where a covenant is historic, it may be necessary to locate the document that created the covenant, or to order the title registers of the land that is affected by the covenant, to check whether there is any indication as to the benefitting land.

Although there are statutory procedures to assist in the removal or interpretation of restrictive covenants, this case demonstrates the delays that can be caused as a result of resolving the issue. The owners' original application for a declaration was made in July 2015. After two years of court process, they are now able to proceed with the development.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.