Restrictive covenant (land) 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 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 Transferring property Residential property Property management Easement, rights and covenants Statutory compliance Property development Property taxes Property in Scotland LexTalk®Property: a Lexis®Nexis community Additional property updates this week Daily and weekly news alerts New and updated content Trackers Key developments and horizon scanning Spring Budget 2024 The Chancellor, Jeremy Hunt, set out measures in Spring Budget 2024 that offered few major shifts for the property sector, with the focus on furnished holiday lettings, the removal of multiple dwellings relief for stamp duty land tax (SDLT), and a cut to the higher rate of capital gains tax (CGT) on residential disposals. As trailed, the government will scrap the Furnished Holiday Lettings regime from 6 April 2025, thereby removing the favourable treatment enjoyed by short-term furnished holiday lets over homes rented to longer-term tenants. The change is intended to apply from 6 April...

What is a restrictive covenant? A restrictive covenant is a binding promise attached to land that limits how the owner may use it. See Practice Note: Restrictive covenants-nature and characteristics. The covenantee, or beneficiary, is the person who owns the benefitting land and enjoys the restriction’s advantage. The beneficiary is commonly the party resisting any release or alteration (though not invariably-see below). The covenantor, or burdened owner, is the person who owns the land subject to the restriction and bears its burden. The burdened owner is often the party seeking a release or change (though not invariably-see below). This Practice Note uses the terms ‘beneficiary’ and ‘burdened owner’ rather than ‘covenantee’ and ‘covenantor’ to recognise that ownership of the land may have changed since the covenant was created. How to discharge or modify a restrictive covenant There are two principal routes to discharge or modify a restrictive covenant, considered in detail below: express release (the non-statutory route) application to the...

A covenant operates as a type of contract. Under the doctrine of privity, contractual rights and obligations attach only to the contracting parties, excluding third persons. Yet, with land-related covenants, property law can permit enforcement by, and sometimes against, individuals beyond the original parties. The applicable principles are: in the majority of instances, the benefit of both restrictive and positive covenants passes to successors in title, as it ‘runs with the land’ at common law and in equity subject to specific conditions, the burden of a restrictive covenant runs with the land in equity alone (and so can be enforced against successors in title), whereas the burden of a positive covenant does not run with the land (but see Statutory exceptions below) This inability of positive covenant burdens to run with the land is widely viewed as a significant shortcoming in English property law. One cannot compel successors in title to comply with even simple positive duties (for example, maintaining a boundary...

Covenants restricting the use of land imposed by a seller may be divided into three classes: covenants created for the seller’s own personal advantage covenants imposed in the seller’s capacity as owner of other retained land, of which the land sold once formed part, intended to protect or benefit the land kept back covenants on the sale of land to multiple purchasers who, together with their respective successors in title, are meant mutually to enjoy the benefit of, and be bound by, those covenants The first class is enforceable only by the seller, unless it is expressly assigned to a third party. For instance, in Cosmichome, a covenant requiring the buyer to occupy the property solely for a specified purpose, capable of being lifted on payment of overage, was held not to be aimed at protecting or benefiting the seller’s land, but to be purely personal to the seller (as the seller’s reason for imposing it was plainly financial rather than proprietary)....

Date [ date ] Parties [ name of Covenantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Covenantor) [ name of Covenantee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Covenantee) [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] 1 Definitions In this Deed, the terms below shall have the following meanings: Covenantee’s Land – the freehold land known as [ description ] [ being [ part of the land ] registered at HM Land Registry with title number [ title number ] ] [ as indicated [ edged OR coloured OR hatched ] [ colour ] on the Plan ]...

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...

What is pre-planning restrictive covenant insurance? Restrictive covenant insurance safeguards people holding an interest in land that is burdened or encumbered by a restrictive covenant. It generally also covers losses including: damages awarded against the insured expenses to modify or demolish a building or other structures to comply with a covenant abortive works costs legal costs This cover can be arranged before planning consent has been obtained for a development where the intended development site is burdened by restrictive covenants. That includes situations where planning permission has not yet been obtained. When is it appropriate to take out a pre-planning restrictive covenant insurance policy? Clearly, if a restrictive covenant looks likely to affect the proposed development, all efforts should be made to resolve matters at the earliest opportunity. Every effort should be made to iron out issues as early as possible...

Section 33 of the Local Government (Miscellaneous Provisions) Act 1982 (LG(MP)A 1982) This provision addresses how local authorities can enforce certain land-related covenants. It applies where a principal council and another person are parties to an instrument under seal that is executed for specific purposes relating to land in which that person has an interest. The section is engaged where the instrument is: executed to secure the carrying out of works on land within the council’s area in which the other party holds an interest; or executed to regulate the use of, or is otherwise connected with, land either within or outside the council’s area in which that party has an interest; and only where the instrument is neither executed to facilitate, nor otherwise connected with, the development of the relevant land. LG(MP)A 1982, s 33(2) sets out powerful enforcement provisions...