Restrictive Covenant Disputes

When dealing with restrictive covenants, obtaining quality advice on the actions to take is highly important because consequences for their breach are significant.

• A restrictive covenant confers a benefit on one landowner and a detriment on another. It is created by an agreement between the landowners and can be registered on the titles to the land.
• The agreement which created the obligations and rights can be enforced by and against subsequent landowners, even if they were not party to the original agreement. Covenants are attached to the land rather than the particular land owners.
• The Courts can enforce a restrictive covenant through an injunction prohibiting the landowner from taking an action which breaches the covenant. You can also be liable for damages. These can be compensatory (to account for the other party’s reduced land value caused by your actions) or can be instead of an injunction. 
• If you have the benefit of a restrictive covenant, you can initiate these actions against the other party.
• If you are unsure about the effect and enforceability of a restrictive covenant or whether it exists or applies to you, you can apply to the Courts to determine these matters.

If You Carry the Burden of a Restrictive Covenant

• You can obtain indemnity insurance to cover you for financial loss in the courts, or you can apply to the Lands Tribunal for a declaration that the covenant is invalid. 
• You will be liable to pay the costs of Lands Tribunal proceedings because you are releasing yourself from an obligation you are otherwise bound by. Insurance is a cheaper option if you can get it.
• There are several reasons why the Lands Tribunal will declare a covenant invalid. These are that the covenant is obsolete because the character of the property has changed (or some other material reason), or the continued existence of the covenant would restrict the reasonable use of the land, or the person entitled to the benefit of the covenant agrees to its discharge, or discharging the covenant will not affect the person entitled to the benefit. 
• Certain information must be included in the application to the Lands Tribunal.
• The Lands Tribunal will publish various notices to alert people who may be entitled to the benefit of the covenant, which will allow objectors to come forward.
• If you wish to oppose an application to have a restrictive covenant modified or discharged, you must give a notice of objection to the Registrar within 28 days’ notice of the application.
• The applicant may be liable to compensate a person for potential losses from the modification or discharge of the covenant.

A full understanding of the effect of restrictive covenants, especially if you carry the burden of one, is essential to ensure you will not be liable for damages or be subject to an injunction. At Judge & Priestley, we can guide you through the process should a dispute arise.

To discuss the legalities surrounding breach of covenants and forfeiture further, please call us on 020 8290 0333 to speak to one of our solicitors.