Restrictive covenant in freehold house

andyfa

Hi,

I am just about to sign a contract to buy a freehold terrace house (built 2010) and I found this.

4.4 a) Not to use or permit to be used the Property or any other part thereof for the carrying out of any trade manufacture business or occupation whatsoever but to use the same as a private dwellinghouse in a single family occupation only.

Can you help me understand? It is an outright freehold with no management company.
1. Would I be in breach of the covenant by registering self-employed where no manufacturing would be performed?
2. Would I be in breach of the covenant by subletting!any of the parts of the property while living in it?
3. Would I be in breach of the covenant by renting it out as HMO?

If I was in breach of the covenant, what would be the consequences and is there any indemnity insurance to limit them?

AdrianC

andyfa wrote: »

I am just about to sign a contract for a freehold house (built 2010) and I found this.

4.4 a) Not to use or permit to be used the Property or any other part thereof for the carrying out of any trade manufacture business or occupation whatsoever but to use the same as a private dwellinghouse in a single family occupation only.

Can you help me understand:
1. Would I be in breach of the covenant by registering self-employed where no manufacturing would be performed?

It wouldn't be the registration, but the carrying out of business activity that would be the breach. Theoretically, that could include checking your email of an evening or doing your VAT return... Would anybody be likely to enforce it? Probably not.

2. Would I be in breach of the covenant by subletting any of the parts of the property while living in it?

Theoretically, maybe. There could be an argument over whether having a lodger was actually perfectly compatible with "single-family living". Again, would anybody go to the lengths of enforcement?

3 Would I be in breach of the covenant by renting it out as HMO?

Definitely, and that may well come to the attention of those capable of enforcement.

If I was in breach of the covenant, what would be the consequences

Most likely is that you are legally prevented from continuing to do those activities. Legal costs could be high. You say it's a 2010-build. Is the covenant in favour of the developer? Is there a resident's association or similar in place?

and is there any indemnity insurance to limit them?

No, no insurance covers you being found out doing things you know you shouldn't be.

davidmcn

Given you're paying your solicitor to advise you about this sort of stuff - haven't you asked them?

As with any covenant though, nothing automatically happens just because you breach them - you'd also have to have done something sufficiently irritating for another party to spend time and money enforcing the covenant. And ultimately they'd have to persuade a court that you're actually causing a problem. As above, at worst the consequences are that you'll be told to stop doing the thing. You don't get summarily fined or evicted or anything.

andyfa

Most likely is that you are legally prevented from continuing to do those activities. Legal costs could be high. You say it's a 2010-build. Is the covenant in favour of the developer? Is there a resident's association or similar in place?

I do not know about any resident's association, but one could always be formed? Part of the development is leasehold, so there must be a management company.

The covenant is passed to everyone who owns a property in the development.

Does the fact that it stats "to use the same as a private dwellinghouse in a single family occupation only" not "to use as a private dwellinghouse in a single family occupation only" makes it less likely to be enforceable?

silvercar

andyfa, welcome to the MSE forums.

I hope you find some useful replies.

I have removed your duplicate thread.

davidmcn

andyfa wrote: »

Does the fact that it stats "to use the same as a private dwellinghouse in a single family occupation only" not "to use as a private dwellinghouse in a single family occupation only" makes it less likely to be enforceable?

Not sure what you think the difference would be? "The same" is referring to "the Property".

AdrianC

andyfa wrote: »

Does the fact that it stats "to use the same as a private dwellinghouse in a single family occupation only" not "to use as a private dwellinghouse in a single family occupation only" makes it less likely to be enforceable?

Not at all. It removes any ambiguity as to what it's talking about.

Browntoa

Where I live has a restrictive covenant regarding HMO use .

Been enforced a couple of times when neighbours complained as the developer is very prepared to litigate . Property owners have always backed down when faced with the likely legal costs in attempting to fight

andyfa

I think maybe I could argue that the use is in effect the same as a single family dwelling, even though is is not a single family.

Browntoa

Does your mortgage allow subletting ?

AdrianC

andyfa wrote: »

I think maybe I could argue that the use is in effect the same as a single family dwelling, even though is is not a single family.

You could try. But while that may carry weight for a lodger, it certainly won't with an HMO.

If you're looking to buy a property to use as an HMO, do everybody a favour and buy a different one.