restrictive covenant by dissolved company

smokedog2020

Hi , I am planning to buy a house, but my solicitor pointed out there is restrictive covenant on that house, which says something like below. 
  Clause 2 - That there should not be erected on the land  any building or erection other than one semi-detached bungalow of brick or stone and a garage otherwise than in accordance with plans and elevations which shall first be approved in writing by the original vendor and architect.

I tried to search for the original vendor, I found that company is dissolved.

 Now problem is seller has already split the existing house into two houses thus breached the covenant. and this happened 3 years ago.

I am trying to understand in this case, who can enforce the covenant. what kind of problem can occure in the future, has anyone seen such situation as above and faced problem with this?

davidmcn

Generally the benefit of covenants runs with the land (i.e. whatever the company owned at the time), so the fact they're now dissolved is probably irrelevant

I presume your solicitor is aware the property has been subdivided, so what advice have they actually given you about the covenant? If none so far, talk to them about it.

AdrianC

The benefit of the covenant was an asset of that company, and would have passed to its creditors when the company was dissolved. It didn't simply cease to exist.

Whether they're aware of that is another question entirely. Whether they have the slightest interest in enforcing it, likewise.

How old is this covenant?

smokedog2020

This covenant was imposed in 1961 when builder sold the house, so its 59 year old.  My solicitor says I will have to buy indemnity policy if I have to proceed, but I am not sure weather its good go ahead with indemnity policy. I prefer to have this one cleared before I buy it.

AdrianC

So the chance of the beneficiary giving the first flying toss about it are roughly zero.

An indemnity policy just covers you for the legal costs if the beneficiary does come back and try anything.

smokedog2020

AdrianC said:

So the chance of the beneficiary giving the first flying toss about it are roughly zero.

An indemnity policy just covers you for the legal costs if the beneficiary does come back and try anything.

you mean they will not give consent easily? or its difficult to get the consent as we can't find them?

AdrianC

It's very probably they don't know they own the benefit of the covenant.
Even if they do own it, they may not care about enforcing it.

Unless they show their face and wave the paperwork at you, you'll never know who they are.

bouicca21

Why assume there were creditors? Or if there were creditors that the debts were not either paid or written off?  I ask from a position of ignorance, just interested in the answer. I thought when a company was dissolved it was a form of legal death.

davidmcn

bouicca21 said:

Why assume there were creditors? Or if there were creditors that the debts were not either paid or written off?  I ask from a position of ignorance, just interested in the answer. I thought when a company was dissolved it was a form of legal death.

Indeed, in principle the company shouldn't have any remaining creditors (or assets) at the time of dissolution - if it had been insolvent then everything should have been dealt with under whatever variety of insolvency procedure was used. If it later turns out that there were surprise assets then those are bona vacantia and belong to the government. As above though, the benefit of covenants is more likely to have run with the land than be retained by the company.

smokedog2020

davidmcn said:

Generally the benefit of covenants runs with the land (i.e. whatever the company owned at the time), so the fact they're now dissolved is probably irrelevant

sorry to comeback to this, does above line says, benefit of covenants is irrelevant or company dissolved or not does not matter, benefit of covenant still valid.

and also when you say : As above though, the benefit of covenants is more likely to have run with the land than be retained by the company.

what does "have run with the land means? 

davidmcn

smokedog2020 said:

davidmcn said:

Generally the benefit of covenants runs with the land (i.e. whatever the company owned at the time), so the fact they're now dissolved is probably irrelevant

sorry to comeback to this, does above line says, benefit of covenants is irrelevant or company dissolved or not does not matter, benefit of covenant still valid.

and also when you say : As above though, the benefit of covenants is more likely to have run with the land than be retained by the company.

what does "have run with the land means? 

Covenants generally set up a relationship between the two properties, not just a personal contract between the two owners at the time it was signed. That's why they're registered in the title deeds. So in the same way that it has to be complied with by whoever now owns the house (not just the original buyer), the party who can enforce it is whoever now owns the property formerly owned by the company. So the fact the original company no longer exists is irrelevant.

Though generally these things are often only of interest for a short period while the developer is still on site (and wanting to keep the place looking as planned), so covering the tiny risk of somebody popping up and complaining years later is usually done by getting an indemnity policy.

Nevertheless, it's a bit odd for the vendors to have (apparently) just ignored the covenant when doing something as significant as subdividing the property.