First Time buyer Question - Restrictive Covenants

lazer

Hi,

I''m a first time buyer and have had offer accepted. mortgage approved etc.

Now, the title deeds of the house have been received from the Vendors mortgage company, It has came to my attention that there is restrictive convenants with the house including

1) No boundary fences greater than 0.5metres
2) Not to build anyhting on the premises except the dwelling house already located thereon and suitable out office (Solicitor has said it is ambigious whether or not this includes extending the current house), except with the permission of the developer
3) That the house is only to be used as a private dwelling house,and not to be used for trading or business purposes.

Now - In the immeadiate future, none of these restrictions actually bother me, however this is to be a potential forever house, and I'm in a profession where working from home could someday be a possibilty, and my boyfriend works in a construction trade, so if he ever wanted to go self employed, the house could potentially be the registered office

The other worry I have with the restrictions is that they could put off future buyers also if I was to resell the house?

Now - what do i do?

I think it is reasonalbe to have expected that these were revealed prior to the sale being agreed, as they could potentially have influenced my decision.

Is it unreasonable to ask for a reduction given the existence of the covenants? (If a reduction is reasonable - by how much?)
What would be the impact of a reduced on the agreed mortgage etc, as If i do go ahead with the sale, I don't want it delayed too much further. Offer was accepted 2 months ago!

This covenants are legally valid and the house was built within the last ten years, with the original developer living near to my house, so I suspect they would need to adhered too.

Any advice gratefully received!

lazer

Anyone able to offer any advice on the above?

poppysarah

Who is the developer? Are they in the area still?

And registered offices can be elsewhere (accountants for instance)

lazer

poppysarah wrote: »

Who is the developer? Are they in the area still?

And registered offices can be elsewhere (accountants for instance)

The developer lives 2 doors away - so unfortunately yes! Its a local builder

And I am an accountant, so could potentially be needing to use it as the registered address

badaz52

We have just purchased a new build and there are, like yourself a lot of covenants. To be honest the covenants are not actively enforced but other residents are quite within their rights to complain if a resident is breaching them.

I understand the dilemna you have though with regards to working from home, have another read through yours, ours is with relation to commercial uses whereby home owners might have a van parked outside. In our case no resident can have a commercial van with signage on it and satellite dishes must be mounted on the rear of the properties to preserve the look of the properties. Up to now 3 residents have broken the covenant.

It is in the interest of the land owner to ensure covenants are enforced otherwise it leaves them open to disputes over payment as they are not keeping their end of the bargain.

They are designed to benefit everybody but I agree some of the rules are petty.

Sadly though I don't think there is much you can do about it as changing it for one, they would have to change it for everyone and other residents might not neccesarily agree with you.

I wouldn't worry about it putting off potential buyers in future as new developments have stricter rules anyway to keep them looking better for longer.

Unfortunately running a business from home from their POV, usually entails a van or some kind of signage and it is this they want to avoid, I think it would put off potential buyers in the future more if there were white vans everywhere and caravans etc blocking up the road.

Basically, what I'm trying to say is the covenants will be very similar for all new(ish) developments so if you back out you will hit the same problem again. It should also be noted that even if you purchase the freehold you are still bound by the same rules as when you buy the land you still have to agree to them. The difference being then you could be held accountable by other residents, where as with leasehold its the duty of the leaseholder.

Hope this helps, sort of!

lazer

badaz52 wrote: »

We have just purchased a new build and there are, like yourself a lot of covenants. To be honest the covenants are not actively enforced but other residents are quite within their rights to complain if a resident is breaching them.

I understand the dilemna you have though with regards to working from home, have another read through yours, ours is with relation to commercial uses whereby home owners might have a van parked outside. In our case no resident can have a commercial van with signage on it and satellite dishes must be mounted on the rear of the properties to preserve the look of the properties. Up to now 3 residents have broken the covenant.

It is in the interest of the land owner to ensure covenants are enforced otherwise it leaves them open to disputes over payment as they are not keeping their end of the bargain.

They are designed to benefit everybody but I agree some of the rules are petty.

Sadly though I don't think there is much you can do about it as changing it for one, they would have to change it for everyone and other residents might not neccesarily agree with you.

I wouldn't worry about it putting off potential buyers in future as new developments have stricter rules anyway to keep them looking better for longer.

Unfortunately running a business from home from their POV, usually entails a van or some kind of signage and it is this they want to avoid, I think it would put off potential buyers in the future more if there were white vans everywhere and caravans etc blocking up the road.

Basically, what I'm trying to say is the covenants will be very similar for all new(ish) developments so if you back out you will hit the same problem again. It should also be noted that even if you purchase the freehold you are still bound by the same rules as when you buy the land you still have to agree to them. The difference being then you could be held accountable by other residents, where as with leasehold its the duty of the leaseholder.

Hope this helps, sort of!

Thanks for this, but I think the issue isn't really with keeping the development looking tidy etc and putting off potential buyers etc.

This is a semi detached house on a lane with only 3 other houses, so i think the covenenants are more to do with the fact the developer also lives on the lane (Doesn't want traffic etc), I also still have to find out who owns the lane etc.

Is there a justification for seeking a reduced price due to covenants as they were undisclosed?

This is a northern Ireland purchase, and from talking to my solicitor, covenants are not very common here, expect relating to fences at the front of developments basically.

Covenants in a development I can understand, but this is rural house not even in a development.

This is not a leasehold property, It is freehold.

I think I am just very nervous about purchasing the wrong property! As i do intend for this to potentially be a forever house, but If they were enforcing the covenants and I could potentailly ahve to move sooner than expected if circumstances change

badaz52

Have you legally completed or exchanged contracts? in our case when we went in to exchange contracts the solicitor disclosed the covenants to us and we signed and agreed. After we completed and moved in we got the a copy of the covenants again to sign and agree to to confirm everything.

If the covenants have been disclosed prior to exchange of contracts then I would say there is no justification for seeking a reduced price as you don't have to go through with the sale.

So long as they disclose them before exchange of contracts it is really up to you whether you agree or back out.

What stage are you currently at?

lazer

badaz52 wrote: »

Have you legally completed or exchanged contracts? in our case when we went in to exchange contracts the solicitor disclosed the covenants to us and we signed and agreed. After we completed and moved in we got the a copy of the covenants again to sign and agree to to confirm everything.

If the covenants have been disclosed prior to exchange of contracts then I would say there is no justification for seeking a reduced price as you don't have to go through with the sale.

So long as they disclose them before exchange of contracts it is really up to you whether you agree or back out.

What stage are you currently at?

Contracts haven't been exchanged yet - I was under the impression that you couldn't re-negotaite after contracts were exhanged as you are then committed to the sale? And that all material facts should be sorted out prior to exchange as this is when the sale becomes legally binding?

My thinking was that my agreed price was based on what i expected would be a normal purchase, and it has now come to light that is restricitons on what I can do with my house - therefore the house is not worth the original agreed price?

This house is not a new build, The current vendors have lived there for 9 years.

badaz52

I'm afraid the only option you may have is to back out of the deal.

Negotiating the price with the current vendors because of a covenant in the ground rent ruling would be unfair as they did not create them and it is not up to them to inform you.

When the current vendors bought the freehold, they agreed to the covenants, that agreement is automatically transferred with the deeds to the new owner so if you agree to purchase the house you agree to the covenants.

There really isn't much you can do and I'm not sure you would have a fair argument if you said the house isn't worth as much now because you wouldn't be able to operate a business from there.

By all means talk to the vendors and explain you will back out unless they "soften" the blow by knocking off money but I would be surprised if they did, they are not obliged to by any means.

At the moment you are not legally bound to anything so give it a go.

Richard_Webster

The situation may be different in Northern Ireland, but in England/Wales this sort of covenant would be pretty standard and you would find that most post 1945 developments would have similar covenants and they would not normally be considered to affect value at all.

If the covenant holder lives nearby you could go and ask him before you buy whether you running your accountancy practice from home would be considered a breach. He might be prepared to sign something to say he would not take action. If not then donb't buy the house.

lazer

Thank you all for the advice!

I did consider talking direct to the original developer, however am reluctant to do so as it will be reminding them that these covenants actually exist.

As I have stated I do not intend at this poitn to in time to be running a business from the house, it just could be a future possibilty to do some work from home, accountancy, child minding, etc.