Restricitve Covenants....

Millsyy2k

We are close to exchange on a new home and have found out from our solicitor that the house we wish to purchase comes with some restrictive covenants.

It is an ex-council house and although the occupant purchased the freehold around 20 years ago the covenants still hold true. However.... having contacted the council today they have informed me that they transferred their local housing stock to a Housing Association in 2002.

Do the Housing Association now benefit from the Covenants given that the owner had already purchased the freehold? Or are they now obsolete?

Any advice will be greatly received as we need to get round these covenants as they could be a deal breaker for us!!

Yorkie1

What does your solicitor say?

DVardysShadow

Benefit of covenants is more likely to stay with the original beneficiary unless the deeds state that the beneficiary s the owner of certain property

Richard_Webster

An original covenantee (in this case the Council) can only enforce restrictive covenants against a buyer's successor in title if the covenantee has retained land capable of being benefited by the covenants. It could be either Council or HA or both, but more likely HA because the benefit of any covenants was probably transferred with the transfer of land.

Millsyy2k

Thank you for your replies.

Richard, is it possible that the HA had the benefits transferred to them for all of the properties that were privately owned at the time? I can understand that the properties owned by the council at the time of transfer would still be bound by these covenants.

How would the HA be able to enforce the covenants? For example, if we added an extension to our property and I work from home (two of the restrictions) what exactly could they do about this? The reason I ask is that neither of these things would have any impact on the properties they now own in terms of value or rental value.

Thank you for your time, you are a great help.

Richard_Webster

Richard, is it possible that the HA had the benefits transferred to them for all of the properties that were privately owned at the time?

Very likely!

In theory if they found out about an extension while it was being built they could apply for an injunction. If they discover later they will only be entitled to damages in respect of the loss of value to land retained by them. Mostly this will be pretty nominal but in odd cases it could make a difference. If you are on the edge of an estate and they want to develop some nearby land the construction of your extension might mean that the planners require them to site a new building a bit further away and that might reduce the value of that land.

In practice the biggest problem is when you come to sell your buyers can never be completely certain that action won't be taken against them. Usually it is unlikely and the amount of likely damages perhaps only in the hundreds, but their solicitors can never be sure of this so an indemnity policy is asked for.

When you sell you presumably will stop running your business from there so the problem goes away for your buyer.

I should point out that in some cases the buyers of other houses on the estate can show that they have the benefit of the covenants and can enforce them. Again this is pretty unlikely but if you really wind a neighbour up then he might be so desperate he is prepared to pay solicitors to go into it all.

Millsyy2k

I'm usually a bit of a risk taker and would just go for this and worry about it later but it would be a nightmare if they stopped us from building an extension. I'm guessing we could appeal as it sounds very unreasonable.

In your opinion (and I realise it's a little bit of putting your finger in the wind :-) is it a good idea to call the HA now to see if any of this will be an issue for them , or even if they might be prepared to remove the covenants?

Once again thank you very much for your time, you are a legend!!

girl_withno_name

I wouldn't contact them - our solicitor advised us NOT to contact the council about breaches to covenants as if they are contacted then any indemnity insurance policy would be void.

Millsyy2k

We haven't moved in yet so nothing is breached, but we might go at this covertly.... Is it a good idea to keep quiet and get some indemnity insurance?

Slinky

Have any of the other properties in the area been extended? Are you able to check to see if anybody had applied to extend and been refused permission?

Millsyy2k

The house next door has an extension - a small conservatory and I suspect people do just go ahead, some even unaware that they have these covenants attached to their deeds.

The reason we are having to be very careful is that I work from home and we would be looking to convert the garage to a music studio (I am a producer). There wouldn't be people coming and going form the premises as I work alone and I'm not a noisy devil with a drum kit, but.... it only takes one neighbour to upset the apple cart and my income would be in serious jeapardy.