25 October 2010 by

Thou Shalt Not……….. Restrictive Covenants and what they mean to you

Covenants are ‘promises’ or ‘obligations’ to either do or not do something, they are found in many legal documents and the vast majority of properties in England will be affected by them in some way. Even when land is bought and sold these covenants ‘run with the land’ and will affect all future owners.

As their name suggests restrictive covenants are obligations to stop you from doing something, they will more commonly have been imposed when a property was constructed to try and keep an area or development a certain way for instance in its layout or appearance.

The restrictive covenants found on the title to a property tend to reflect the period the property was built in. If for instance you own a 19th Century property then some more frequently found restrictive covenants include not being able to keep pigs or chickens at the property or not being able to to build on the site or trade from the property. Modern restrictive covenants for new properties can include not being able to park a caravan outside the property, not being able to erect a satellite dish or having to keep the exterior paintwork a certain colour. These are just a few examples, in practice there are a wide variety of covenants all designed to reflect the property affected.

Both old and new restrictive covenants can cause a headache when buying and selling property today as many people are not aware of the covenants affecting their homes and unknowingly breach them. Modern builders tend to be fairly clued up and will impose restrictive covenants saying for instance that no extensions or alterations can take place without their consent, they then go on to charge a fee for issuing that consent. This consent is in addition to any Local Authority approvals which may be required.

As restrictive covenants don’t ‘expire’, if they are breached the person with the benefit of the covenant can enforce them against you. Obviously when dealing with covenants from a hundred years ago there is a fair chance that the original company or individual who had the power to enforce the covenant is not around any more and no action will ever be taken. It should be borne in mind, however, that the benefit of a restrictive covenant will pass to their successors in title.

If you are selling a property and you have breached a covenant, you may be asked to provide an indemnity insurance policy. This will be handed to the buyer on completion and will protect them against the financial consequences of anyone trying to enforce the breached covenant in the future. The policy will involve a one off premium based on the value of the property.

It is sometimes possible to have a restrictive covenant removed from a title via a government organisation called the Lands Tribunal. The Tribunal will look at your application and determine whether there is a case to have the covenant removed or not, this is quite an involved process and only tends to occur in very limited circumstances.

8 October 2010 by Vincent Billings

“Security is not a dirty word…”

When a business is owed money, whether it is due now or at some point in the future, it is generally in the commercial interest of the creditor, the entity which is owed the money, to have some form of protection or assurance that it will be able to recoup the money if the debtor does not fulfil its obligations to pay the sum outstanding by the due date.

22 October 2010 by Sonal Ghelani

House Prices – A Quick Update

Recent data released by the Bank of England has revealed that the amount of loans granted is still half of that which was granted in 2007, despite the fact that lenders are lowering the cost of their most popular mortgages.

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