Many properties are sold that are subject to a restrictive covenant. A couple of examples of a restrictive covenant could be, to prohibit the keeping of animals other than domestic animals, or to prevent major alterations to the property. Oonagh McKinney, Commercial Property partner says, “A restrictive covenant does not usually need further action unless it seriously affects the buyer’s intended use of the property.” The buyer’s solicitor should inform the buyer about the liability for breach of the covenant.
A solicitor has to follow certain procedures, if it is shown that a buyer’s intended use of a property may be in breach of a covenant. A check must be made to see if the covenant is registered – since 1925 covenants that are not registered on the charges register or as a Class D entry on that register, cannot be enforced. Unless it is absolutely clear that the covenant is invalid the solicitor will assume that it is enforceable and advise about taking out indemnity insurance. This will cover the liability of any future breach of covenant. If issued, the policy may be passed on to any successors.
If a policy cannot be obtained, the buyer may consider getting consent from the person who is in benefit of the covenant or may apply to the Lands Chamber. If none of these solutions are practical, a solicitor would advise against buying the property.
The Lands Chamber or Upper Tribunal has authority under certain circumstances to allow a discharge or modification of a restrictive covenant, but this is not an easy option to pursue. The County Court has a similar but restricted jurisdiction.
For a free initial chat on this or any other Commercial Property matter, please call 01202 499255 and Oonaghor a member of her team will be happy to discuss any questions that you may have.
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