Breach of restrictive covenant when selling

markyyyyyy

Hi,
we are selling our house and i run 20% of my business with people visiting a cabin in my garden, and 80% of my work is on a mobile basis.
When i first started working at home i phoned my local council and the person advised that i am ok to work from home so long as neighbours have no issue with people coming and going.

Now we are in the process of selling the house, the buyers' solicitor has raised enquiries saying that I have breached a restrictive covenant (didn't know what that was until today) and that i need to provide evidence from council that i can work at home. I obviously don't have this.

The letter states that if the seller (me) doesn't have this confirmation from the council, then i have to take out an indemnity police at completion of the sale.

What does this indemnity policy cover me / the buyers for?
How much is this looking at costing me?

Cheers

davidmcn

Are the buyers wanting to do something similar? If not then I don't see why it's of concern to them - at worse you'd get told to stop doing it. Is the covenant for the benefit of the council?

markyyyyyy

Not what i gather - they both work at the hospital so i doubt they'll use it for similar.
They have not stated that it's for the benefit of the council so i' also confused as to why i need it?

PasturesNew

I don't see how what you do/where/how has even entered into any conversation.  How did that slip in?

markyyyyyy

they took a photo of my log cabin with the door open and it had my treatment table and certificates on show

PasturesNew

markyyyyyy said:

they took a photo of my log cabin with the door open and it had my treatment table and certificates on show

Ah.  You/your solicitor should've spotted the restrictive covenants when you bought, then you'd have either backed out of buying it, or kept a low profile   Many places have similar covenants, including things like vehicles you can/can't park, whether you can have a shed ... and all sorts.  I even lived in a flat where laundry wasn't allowed to be strung out in the garden. 
Make sure, for your future places, that you check for all such things. 

As for your original question: No idea... how bizarre.

davidmcn

You'll need to get your solicitor to explain the relevance to you. If using the property for work is a breach of the covenant, it'll stop as soon as you move out. Might make more sense if it was a covenant saying e.g. you needed consent just to build the cabin.

markyyyyyy

okay i'll ask the solicitor the relevance of the covenant and who benefits from it / why it is needed. thanks for your input

NeilCr

We discussed restrictive covenants and businesses with you a couple of years back

https://forums.moneysavingexpert.com/discussion/5801856/garage-change-of-use-of-taylor-wimpey-home/p4

so I am a bit surprised that you didn't check this time around. I am even more surprised that your solicitor missed it 

I agree with David. I can't see that you running a business impacts on the buyers. The cabin being built - or something else - is more likely. 

notrouble

You running a business there, whether in breach of a covenant or not, is irrelevant to your sale or to your buyers. As soon as they own, there will be no further business being run (unless they too decide to do so, which is their problem, not yours), and therefor no longer any breach.

The presence of the cabin may be a breach, in which case that breach will continue after the sale (unless the cabin is removed) and that might require an indemnity insurance (to pay out if the council/whoever forces the buyers to remove the cabin). So you need to check if it is the business, or the cabin, that is the problem.

bucksbloke

The reason they are asking for an indemnity is to cover the potential losses or costs arising from your lack of compliance with the covenants. Although you ceasing the activity will stop the breach, there is still the risk of a claim against the property for the past breach.