Restrictive Covenant meaning

Funder’s primary objective When a buyer takes property subject to overage and seeks finance secured on that asset, a funder will require assurance that the overage provisions do not obstruct or curtail enforcement of its security. The lender must be confident its charge constitutes sound security over the property. Property and associated rights Assess the character of the site to be charged. Where it forms part of a broader development, consider whether, on a power of sale being exercised, the property will depend on rights over adjoining land held (or to be acquired) by the buyer, such as: rights of way rights concerning service media rights of support If such rights are necessary, agree a form of deed of easement to be annexed to the charge, and allow the funder to require grant of that easement when needed. Also examine whether the seller’s chosen mechanism for securing the overage is acceptable to a funder...

This checklist functions as a reference, highlighting considerations for buyer’s solicitors when drafting a share purchase agreement (also referred to as an SPA or share sale agreement) that records the sale and purchase of the entire issued share capital of a private limited company, where the transaction features split exchange as well as completion...

This Checklist Land title documentation—registered or otherwise—may indicate that the current owner, or a prior proprietor, has agreed covenants affecting all or part of the land. These obligations can be positive (for example, to keep a boundary fence in repair) or restrictive (for example, a promise not to build alongside a boundary). While covenants invariably bind the original contracting parties, the law treats positive and restrictive covenants differently when assessing their impact on successors in title to those parties. This Checklist is intended for use during due diligence where a property is burdened by and/or enjoys the benefit of one or more restrictive covenants. Such covenants may be: imposed for the landowner’s own benefit; they are personal and enforceable only by the original parties unless expressly assigned to a third party part of a scheme, such as a building scheme, where mutual enforceability is intended—see Practice Note: Restrictive covenants—nature and characteristics—Building schemes imposed on one parcel of land with the intention of benefiting or...

In this issue: Transferring property Commercial real estate finance Statutory compliance Property development Easements, rights and covenants Residential property Insurance Property taxes Additional property updates this week Daily and weekly news alerts New and updated content Trackers New Q&As Transferring property HMLR announces plans to share data on avoidable requisitions with customers HM Land Registry intends to provide firms with visibility of the proportion of their applications that include simple-to-avoid requisitions, such as mismatched names, missing documents, and witness information. These insights are scheduled for publication in Autumn 2025. Across firms, current levels vary, with between 0% and 24% of applications affected. In tandem, HMLR is refining its processes and systems to better support users: raising requisitions only where necessary and automatically validating certain details at the drafting stage. The goal is to achieve accurate registrations first time, without the need for extra clarification or additional supporting material. See: LNB...

In this issue: Key developments and horizon scanning Transferring property Leasing property Property management Residential property Environment, energy and buildings Easements, rights and covenants Property development Property taxes Property in Wales Property in Scotland LexTalk®Property: a Lexis®Nexis community Additional property updates this week Daily and weekly news alerts New and updated content Trackers New Q&As Key developments and horizon scanning BPF and Law Commission comment on draft Commonhold and Leasehold Reform Bill The British Property Federation (BPF) has issued its views on the draft Commonhold and Leasehold Reform Bill, warning that proposed caps on ground rents could undermine investments held by pension funds and institutional investors. It said investors who acted in good faith to meet pension liabilities should be compensated, and noted that government announcements do not address this point. While it supports parts of the commonhold package, including adjustments to funding for major works,...

In this issue: Key developments and horizon scanning Repairing obligations and dilapidations Residential tenancies Service charges Rent and rates Disputes and remedies Neighbour disputes Enfranchisement and right to manage Contractual issues Easements and covenants Property disputes in Scotland Additional Property Disputes updates LexTalk® Property Disputes: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Key developments and horizon scanning The Renters’ Rights Act 2025—SDLT The Renters’ Rights Act 2025 is intended to bring in tenant-favourable reforms, yet recent reporting has stressed that the roll-out of assured periodic tenancies may result in SDLT becoming payable on rent for some tenants in the years ahead. While these SDLT provisions are long-standing, general awareness remains limited. Andrew Kerr and Ella Perrett of Burges Salmon assess the position. See News Analysis: The Renters’ Rights Act 2025–SDLT. Repairing obligations and dilapidations ...

Interim ‘springboard’ injunctions This Practice Note examines the character and reach of interim ‘springboard’ injunctions, deployed to stop a transgressor securing an unfair competitive advantage arising from unlawful conduct. It addresses the particular circumstances in which an employer may seek a springboard injunction to curb the actions of a former employee, the evidential requirements that must be met to obtain the order, and the means by which protection is delivered in practice. It also considers how the length and breadth of the injunction can be confined and tailored. On occasion, an employer will pursue an injunction to shield themselves from the conduct of a former employee who, before employment ended, breached a post-termination restriction (restrictive covenant) or misused the employer’s confidential information and, by that misuse, gained an unfair competitive advantage over their former employer. An interim order intended to neutralise any unfair competitive advantage that might be obtained through misuse of an employer’s confidential information, breach of contract, or the commission of a tort, is commonly called...

This Practice Note This Practice Note explores employment-related claims that can or must be pursued in the High Court or the County Court. It supplies a very high-level outline of the procedures governing such claims in those courts under the Civil Procedure Rules 1998 (CPR), and directs readers to further materials within the Dispute Resolution module that deliver a complete, in-depth guide to civil procedure. It also addresses: handling overlapping employment tribunal and civil court proceedings; claims concerning post-termination restraints (restrictive covenants); tort-based claims (e.g. personal injury, negligence, and workplace stress); deciding the appropriate court for the claim; judicial review; and civil court time limits, including extensions of time and how the limitation period is determined. It then provides a synopsis of the principal procedural stages of a civil court claim: pre-action requirements including the Practice Direction Pre-Action Conduct and Protocols, adherence to pre-action protocols, pre-action conduct where no protocol applies, commencing a claim, the defendant’s steps once particulars of claim are served, case management, track allocation and directions...

This Practice Note sets out when, for breaches of restrictive covenants, the court may grant damages rather than an injunction, how such damages are quantified, and the effect of any delay by the beneficiary in bringing a claim. Damages or injunction—the test As a rule, the principal response to breach of a restrictive covenant is a final injunction restraining the misconduct. That said, the court can substitute damages in place of injunctive relief. Save where the original covenantor is in breach, this is an equitable jurisdiction, so the remedy is discretionary. The court may weigh the parties’ conduct—for example, the beneficiary’s delay or inaction—as evidence that an award of damages in lieu could be appropriate. In Shelfer v City of London Electric Lighting, the court articulated a ‘working rule’ for preferring damages where: the infringement of the claimant’s legal rights is minor the harm is readily assessable in monetary terms a modest financial award would provide adequate compensation, and granting an...

This agreement is entered into on [ insert day and month ] 20[ insert year ] Parties The various individuals listed by name and address in Schedule 1 (collectively, the Sellers), [ Insert name of purchasing corporate entity ], a company incorporated in [ England and Wales OR [ insert country of incorporation ] ], registered under number [ insert company number ], with its registered office at [ insert address ] (the Buyer) [ (each Seller and the Buyer being a Party and, collectively, the Sellers and the Buyer being the Parties). ] BACKGROUND (A) The Company (as defined below) is a private limited company by shares, formed in [ England and Wales OR [ insert country of incorporation ] ]. Information about the Company appears in Schedule 2, Part A. (B) The Sellers hold, both legally and beneficially, the Sale Shares (as defined below), which in total constitute all of the Company’s allotted and issued share capital....

This Agreement is entered into on [ insert day and month ] 20[ insert year ] Parties [ Insert name of selling corporate entity ], a company incorporated in [ England and Wales OR [ insert country of incorporation ] OR with registered number [ insert company number ] ], whose registered office is at [ insert address ] (the Seller); [ Insert name of purchasing corporate entity ], incorporated in England and Wales OR [ insert country of incorporation ] OR with registered number [ insert company number ], with its registered office at [ insert address ] (the Buyer); [ Insert name of guarantor entity ], incorporated in England and Wales OR [ insert country of incorporation ] with registered number [ insert company number ], whose registered office is at [ insert address ] (the Guarantor) [ (each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties)....

This Agreement is dated [ insert day and month ] 20[ insert year ] Parties The various individuals whose names and addresses appear in Schedule 1 (together, the Sellers); and [ Insert name of purchasing corporate entity ], a company incorporated in [ England and Wales OR [ insert country of incorporation ] ] with registered number [ insert company number ], whose registered office is at [ insert address ] (the Buyer), [ (each Seller and the Buyer being a Party, and together the Sellers and the Buyer being the Parties). ] Background The Company (as defined below) is a private company limited by shares and is incorporated in [ England and Wales OR [ insert country of incorporation ] ]. Details of the Company are set out in Schedule 2. The Sellers are the legal and beneficial owners of the Sale Shares (as defined below), which in aggregate comprise the entire allotted and issued share...

A post-termination restriction (or restrictive covenant) A post-termination restriction, also called a restrictive covenant, in an employment contract is unenforceable from the outset unless the limits it places are reasonable, having regard to the interests of both the parties and of the public...

Meaning of ‘covenant’ Definition and construction of covenant: Halsbury’s Laws of England [448] states that a covenant is a promise contained in a deed, binding the parties, or any one of them, to do, or to refrain from doing, a particular act. The term may nonetheless be read so as to include provisions in an agreement under hand where, absent such construction, the wording would be deprived of effect; for example, where a document refers to the “covenants” of a lease that is not executed by deed...

When A and B make a covenant regulating the use of B’s freehold land (presently owned by B or to be conveyed to B) for the benefit of land kept or held by A, it is, as a contractual promise, immediately enforceable. If, however, either A or B disposes of the interest in their respective parcels, the covenant is enforceable only where the equitable rules governing the enforceability of freehold covenants are fulfilled. Where A, being the original covenantee, has transferred the interest in the benefitted land to C, C may enforce the covenant solely if it is demonstrable that the covenant benefits that land and that the benefit has passed by assignment. The latter element will, in most cases, arise automatically by virtue of section 78 of the Law of Property Act 1925 (LPA 1925), as provided under that statute in equity...