Restrictive Covenant Advice

pebsham

Just after some wise advice please. When we bought our current house (13 years ago) The sellers held up exchange of contract for ages to the point that we nearly lost the sale of our house. When we finally received the contract the sellers had included a restrictive covenant stating that no dwellings could be built on the plot without substantial financial payment to them. After desperate scrabbling from us and with our own sale in imminent danger of failing we managed to get this changed to "one" dwelling only on the plot.

The house on the plot is a 30's house in a residential street of mixed age & style buildings. The land attached is reasonably substantial for an inner city. We bought the house with the intention of living there with our 5 children until they were older and build small homes for them if they required it.
The previous owners of our house do not live locally and have no land abutting ours.
If I breached the terms of the covenant, I believe I could be taken to court for "breach of contract". With my layman's understanding, breach of contract should reflect the "breached" party's actual losses.
If I am correct can anybody explain what their actual losses are & whether it is likely I could obtain indemnity for "knowingly" breaching the covenant.
It's currently academic because my youngest is still only 12 but successive governments attitudes to " back garden building" has me thinking of applying for outline planning permission.

Sorry for the long-winded question but I hope somebody can lift the "vale of ignorance" from my eyes.

Thanks all

G_M

If, as you say:

We bought the house with the intention of living there with our 5 children until they were older and build small homes for them if they required it.

why on earth did you agree to buy with a restictive covenant that explicitly prohibits this? Mad!

A covenant is not a contract. If it was, it would be called..... a contract!

If you breach it, I believe you can be forced to rectify the breach ie remove the house you have built.

pebsham

Thanks for replying I understand that the words covenant and contract are different but the term covenant is archaic & my understanding is that there are two remedies under law. Firstly if the "injured" party is aware of the "breach" early on they can seek an injunction to prevent continuation, (by no means guarenteed). If made aware after completion they can sue for damages therefore effectively for breach of contract. I do not believe there has ever been a court order to remove a residential dwelling for breach of covenant (as long as planning/building reg's have been followed).

As far as why did we buy maybe I can explain:
As explained the sellers dragged there feet so long the only way I could complete the sale of my house was to sell my house before completion on the house I was buying. My 5-month pregnant wife, myself & our 4 children intended to have a "holiday" while we waited.
On completion day my house contents were driven 65 miles to their new town & put into storage.The keys were handed to the estate agent & we drove to our rented holiday flat to await news of the funds transferring into my solicitors account.
Along with some £1.7 Million of other people's money our buyer's solicitor had run off back to India with our proceeds.
We were Royally screwed, we had to continue paying the mortgage on an empty house, find another holiday let and deal with the law society's compensation nonsense.

My wife became ill and had to be admitted to hospital because of the stress leaving me in a grotty flat with 4 children between 10 -2 years old and to be honest if the seller's of our "new home" had requested a full pipe band on the anniversary of there favourite saint I would have probably have signed for it just to return to a normal life.

Anybody with any thoughts or advice thanks in advance

G_M

I sympathise with your being 'royally screwed' but don't see the relevance. Of that, or the fact the sellers 'dragged their feet'.

1) you wanted a property that would give you the opportunity to later build houses in the garden

2) you bought a property that had a restrictive covenant specifically prohibiting building houses in the garden

Even a half-wit :dance: would have realised this might cause a problem in the future if they decided to ... err, 'build houses in the garden'

Lionel_Thinkbag

Sorry I can't offer any substantial advice. It amazes me that such a thing could exist. I don't know if the previous owners are doing that out of greed, or they wish to preserve a green area. :undecided

The one dwelling you do have permission for, how many beds would it be? Would you be allowed/able to divide it into seperate 'apartments' in name only - where you would have say, 2 bathrooms and 2 kitchens, but it would still count as one house? Obviously thats not ideal, as you have 5 kids, but I'm just throwing it out there.

xylophone

Was this in fact a restrictive covenant (rather than some kind of "overage" clause)?

G_M

Lionel_Thinkbag wrote: »

Sorry I can't offer any substantial advice. It amazes me that such a thing could exist. I don't know if the previous owners are doing that out of greed, or they wish to preserve a green area. :undecided

The one dwelling you do have permission for, how many beds would it be? Would you be allowed/able to divide it into seperate 'apartments' in name only - where you would have say, 2 bathrooms and 2 kitchens, but it would still count as one house? Obviously thats not ideal, as you have 5 kids, but I'm just throwing it out there.

It is quite common.

Usually (though not apparantly here) it is because the seller is selling off part of their land and does not want a housing estate built there as they still live next door.

But there could be other reasons.

Also common is tosell land without planning permission, but a covenant that if PP is later granted to build, then an additional fee is payable eg a % of the increase in value.

eddddy

Hi pebsham

As xylophone suggests, it sounds more like an "overage clause" or "uplift clause" in your sale/purchase contract - rather than a restrictive covenant.

As a first step, it may be worth making an informal enquiry at your local planning department, about the likelihood of planning consent being granted. If the answer is a definitive "very unlikely", it's probably not worth considering it further.

If you do have an "overage clause", it may have a time limit (e.g. 15 years), and there will probably be a "trigger event" which makes payment due.

Gaining Planning Consent is often the trigger event. i.e. if you apply for and get outline planning consent, payment becomes due - even if you don't actually go on to build anything.

pebsham

If as in my case the only purpose of the restrictive covenant was to create a "downstream" money making scheme doesn't it really make a mockery of the whole idea. This has led to the "ransom strip" mentality where at least the landowner actually retains an "interest" in adjoining land.

In my case somebody sold their property (a house in a road with a big garden) & moved to another property. The law allows for them to then dictate (apparently in perpetuity) to profit from that land/

I sell you a car and if you then resell that car at an increased price (at any point in the future) I'm entitled to a share in the profit.

As far as I can see the only recourse the "old" owners have is to seek an injunction in the future and all they would ask for is not to prevent building but merely for their slice of money for a property they ceased to own in the past.

kiddy_guy

OP - what you appear to have is a restrictive uplift clause.

You've 2 got 2 options as far as I can see to get round it.

Hope the sellers don't live very long :rotfl:

or

Sell the pieces of land to your offspring. If they then subsequently build a house on the land, it's nothing to do with you!

Realistically you've got a bit of an issue...