Tackling restrictive covenants in property development

Most properties are subject to one or more restrictive covenants, which aim to restrict what can and can’t be done with the property.

By Stephen Greenwood, partner at Farleys Solicitors

When a property owner (commercial or residential) wants to change the use of or alter a property, the need to get planning permission is rarely overlooked … but restrictive covenants often are.

Even if the local authority grants planning permission, you may still not be able to develop the land if it is subject to covenants, so property deeds must always be checked.

If a covenant affects plans to develop, there are a number of ways in which this can be addressed.

You should first consult a solicitor to check that the covenant is valid, and that its wording affects the proposed development.

There are a number of grounds on which a covenant could be unenforceable, for example it could be ambiguous, contrary to competition law, or public policy.

The covenant must also ‘touch and concern’ land owned by the person seeking to enforce it.

This isn’t a straightforward matter of whether the land is adjacent, but is an important means of potentially challenging a covenant, and is well worth investigating.

If a covenant is found to be valid and enforceable it can still be dealt with in a number of ways, including: A deed of release with the person entitled to the benefit Indemnity insurance against breach An application to the Lands Tribunal to have the covenant modified or discharged Obtaining a court declaration as to the enforceability of the covenant Legal advice should be taken before pursuing any of these actions because pursuing one avenue can make another unavailable. If none of the above are practical options, then you may simply decide to proceed despite the covenant.

This should only be after taking legal advice on the risks involved. In some cases a developer will make a judgment that the remedies available to a covenant holder are not sufficient to justify abandoning the proposed development.