Breach of restrictive covenant when selling

davidmcn

bucksbloke said:

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. 

What could they claim for? I can't see what action could be taken other than an order to stop the covenant being breached.

Otherwise we'd get in the absurd territory of buyers having to worry about not only what breaches the current occupiers might be committing, but what every previous occupier might have done.

diggingdude

imagine
answering for the victorians

Bossypants

bucksbloke said:

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. 

This would only apply if the breach was set to continue in the new ownership. For example, the houses in my development all have convenants to 'maintain the dwarf wall' in their fron gardens, so if someone had failed to do that, there might be a cause for action down the line. That would  be the responsibility of the current owner, even if that was no longer the same owner who originally breached the covenant. 

In OP's case, though, the breach will cease the moment they no longer own the house, so there is no risk of a claim in future.

PasturesNew

I wonder if .... worst case, tiny tiny print .... there is the opportunity, the 0.001% chance, that any contract allows the writer of the covenant to come and seize the property from the person who did the breach.  If such a bizarre occurrence were to come about, the seizure would apply to when the OP owned the house, thus making the sale invalid and the new owner turfed out. 

All highly irregular, unlikely, hence the indemnity.  Just guessing here. 

bucksbloke

davidmcn said:

bucksbloke said:

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. 

What could they claim for? I can't see what action could be taken other than an order to stop the covenant being breached.

Otherwise we'd get in the absurd territory of buyers having to worry about not only what breaches the current occupiers might be committing, but what every previous occupier might have done.

Don't know, but every time I've sold a house with a covenant - I've been asked to confirm that I have never breached anything - not whether I have may have breached and stopped breaching. 

davidmcn

bucksbloke said:

davidmcn said:

bucksbloke said:

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. 

What could they claim for? I can't see what action could be taken other than an order to stop the covenant being breached.

Otherwise we'd get in the absurd territory of buyers having to worry about not only what breaches the current occupiers might be committing, but what every previous occupier might have done.

Don't know, but every time I've sold a house with a covenant - I've been asked to confirm that I have never breached anything - not whether I have may have breached and stopped breaching. 

Right, but that's to cover things which are continuing breaches e.g. if you've made an alteration or built something without getting consent required by a covenant, and it's still there. So in this case if it were the presence of the cabin in the back garden which was the problem, it could still in theory be required to be removed.