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Restrictive Covenants: Your land but not your rules

Updated: Nov 25, 2021

Are you thinking of leasing your commercial property? Maybe you are a tenant considering assigning or underletting a lease to another business? Perhaps you are considering purchasing your first commercial property or taking on your first lease? In this article we will cover all of this and more by answering the following questions:

  1. What are restrictive covenants?

  2. Are restrictive covenants enforceable?

  3. Can you remove or edit restrictive covenants?

Restrictive covenants are very common. Most properties in the UK, both commercial and non-commercial, and much of the UK’s land is subject to at least one restrictive covenant.

Whenever a commercial property is bought or leased, these restrictive covenants must be considered. This is because each covenant represents a legal contract. In our experience, the consequences of breaking restrictive covenants can be high, and it is therefore important for you to ensure that you know what you are agreeing to.

What are restrictive covenants?

Restrictive covenants are rules that dictate what you can or cannot do to your property or your land. They are formed by way of an agreement which is then written into the title deeds of the property and are often used to protect your neighbour’s interests.

Restrictive covenants can appear on the title deeds of any property irrespective of age or date or registration. It is often the case that that there is more than one restrictive covenant and that additional restrictions get added over time. Some common examples include:

  • Not carrying out a business on the premises

  • No permanent structures are to be erected on the land

  • No alterations such as extensions or conversions are to be made to the property.

Any restrictive covenants that do affect your property can be found in section C of the “Charges register” of your Title deed. Any restrictive covenants of which your property has the benefit can be found in section A of the “Property Register” of your Title deeds. As most properties are registered with the Land Registry, you can request a copy of these documents (known as office copy entries) from the Land Registry’s website.

Are restrictive covenants enforceable?

Restrictive covenants are binding on the parties that entered into the original agreement, their assignees, and their successors in title. The original parties to the contract are bound by the normal rules of contract. The assignees and successors in title can only enforce the contract because the covenant is binding against the land. This is why restrictive covenants are expressed as running with the land. This means that restrictive covenants agreed five hundred (500) years ago could still be enforced today provided they meet the following criteria:

The restrictive covenant “touches and concerns the land”

Restrictive covenants must provide a benefit to another piece of land to be enforceable. It cannot be a personal benefit or a means of securing money. There must also be an intention for the benefit to run with the land it benefits.

The beneficiary (or person enforcing the covenant) must own the land

You cannot enforce restrictive covenants against land that you do not own as you are not a party to the contract.

The terms of the restrictive covenant must be clear

If the covenant is worded ambiguously, the land is undefined, or future events have rendered it impossible to uphold, then the covenant will be unenforceable.

The land with the restriction must be separate from the land with the burden

If both pieces of land are owned by the same person at any point after the agreement was made, then the restrictive covenant will be unenforceable.

The benefit and burden must be passed on correctly

If either the benefit or burden is not passed on by means of annexation or assignment, or through a scheme of development, then the covenant cannot be enforced.

If all these criteria have been met, then the restrictive covenant will be enforceable. It is important to note that if you lease a commercial property, you will still be liable for any breaches committed by your tenants and sub-tenants. It is therefore advisable to consider obtaining a guarantee from your tenants and/or taking out indemnity insurance to cover any future claims.

Can you remove or edit restrictive covenants?

It is possible to have a restrictive covenant amended or removed from the Title deeds of your property. This is most commonly done by way of an application to the Lands Chamber of the Upper Tribunal. This is both costly and time-consuming because the criteria are difficult to meet and there is no guarantee of success.

The criteria are as follows:

  • The restrictive covenant is obsolete due to a change to the area or the property.

  • The restrictive covenant impedes the use of the burdened land.

  • The beneficiary has agreed to its amendment or removal.

  • The beneficiary would not be injured in any way by the amendment or removal of the covenant.

If you are unsuccessful in your application, then you will be responsible for paying the beneficiary’s costs. If you are successful, then the covenant will be discharged or amended. However, being successful could have huge financial implications as the beneficiary will NOT be paying your costs, and the tribunal could award them compensation. This compensation will be based on the actual loss of value to the beneficiary’s land because of the removal or modification of the restrictive covenant.

Restrictive covenants can also be removed by the granting of a deed from the landowner with the benefit, or by continuous breach of the restrictive covenant. The former requires the beneficiary’s consent, and the latter only applies if the breach has been ongoing for over twenty (20) years without objection or a claim being made by the beneficiary.

How can Pure Business Law help?

We are specialist Commercial Property and Commercial Conveyancing Solicitors based in Bedford and London and operating nationally. We act for parties buying, selling and leasing commercial properties on a daily basis and provide advice on restrictive covenants.

If you would like to discuss the sale, purchase or lease of a commercial property, any restrictive covenants affecting your property or that of your family or business, or anything raised in this article please contact us and speak with one of our solicitors. Pure Business Law is regulated by the Solicitors Regulation Authority and is a licensed member of the Law Society of England & Wales.

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