Considering a property with restrictive covenants? Hear what the experts have to say.
Understanding Restrictive Covenants in Property
Restrictive covenants are legal restrictions that regulate either the appearance or use of a property. These covenants can have a significant impact on the use and value of a property, and it's essential for buyers, sellers, and developers to understand them.
Common examples of restrictive covenants in property include prohibitions or limits on building or making extensions on the land, using the property for business or commercial purposes, keeping certain animals, installing fences at the front, satellite dishes, or altering the appearance of the property without consent. These covenants are often put in place by developers or previous landowners to maintain uniformity, protect property values, preserve sightlines, access, or overall community character, and prevent activities likely to disturb neighbors.
Restrictive covenants can limit what owners can do on or with their land, such as preventing expansions, commercial use, or structural changes that might otherwise increase utility or value. Even if local planning permission is granted, breaching a restrictive covenant can lead to legal consequences, affecting the ability to enhance or alter a property. These restrictions can reduce desirability to future buyers, potentially lowering resale value or marketability, especially if they forbid commonly desired improvements or uses.
However, by preserving neighborhood character or preventing undesirable uses, restrictive covenants can protect or enhance property values in the area overall. In the development context, restrictive covenants can limit what types of buildings or uses a land parcel is limited to, which can transform a prime site into a less valuable one or require legal efforts to modify covenants.
Because restrictive covenants can "run with the land," they bind successors in title, meaning all future owners must comply unless the covenant is legally removed or modified. If the person who put the covenant in place cannot be found, or there is a dispute, the case can be taken to the Upper Land Tribunal.
When buying a property, a solicitor should provide a report on title detailing any restrictive covenants and the associated risks. Indemnity insurance can be taken out to secure a mortgage or minimize risks when buying a house with a restrictive covenant. It's also important to note that most properties do not have restrictive covenants, but for those that do, they can significantly impact the use and value of the property.
In some cases, a court may decide to modify or discharge a restrictive covenant if it is found to be unreasonable or if it conflicts with other legal obligations such as planning laws. The process of removing a restrictive covenant can be lengthy and expensive.
In conclusion, understanding restrictive covenants is crucial when buying, selling, or developing property. Seek legal advice to ensure you are fully aware of any restrictions that may affect your plans for the property.
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