New Covenant, new build, confussed

naynay

We are buying a new build.

Parcel of land bought by four people, split into two one part sold to two original buyers. When the split happen a covenant was drawn up between the four people stating no new dwelling would be built on the purchased land. Within days a new dwelling was being built. (There are older covenants but none refer to dwellings or any other buildings.) The couple who ‘own’ the Covenant live next door and have helped build the new home on the land which they said not to build a dwelling on. 

I’m confused why would you state no building then build within days. Planning sort before Covenant. 

No answer from their solicitor who also didn’t want to hand over building warranty. 

What’s going on?
i need to get my head around it. It seems estate agent also knew stating that they had bought an indemnity to cover it. They had, 2 weeks ago. 

Any ideas anyone?

naynay

Should add this was in 2019 and Covent dates from then.

user1977

An indemnity policy is unlikely to help where the beneficiary of the covenant has recent awareness of the breach.

Assuming you're not trying to do this yourself, what advice is your solicitor providing?

ilikewatch2

Was the intention to prevent any additional building taking place on the site? A covenant doesn't really make any difference until someone chooses to enforce it, so if the couple who "own" the covenant were involved in the original development then they presumably wouldn't be enforcing it in that case, but could choose to enforce it against any future development.

Is it possible that they saved a few quid by having a covenant to prevent further development written at the same time as the legal work for the sale of the land was completed rather than adding a covenant at a later date after the initial development was completed?

naynay

User77. Thank you.
Solicitor says the Covenant has been breached and that the indemnity would be of little help in years to come if the owner of the covenant decided to come knocking at some stage in the future in terms of stress as well.

ilikewatch2 Thank you.
No room for further builds unless a block if flats. 

They maybe won’t enforce it but wondered if they could gain in some way from it after being sold on?

ilikewatch2

Rather than the covenant being to prevent additional development, could it be to prevent the existing property being redeveloped? I'm aware of a situation local to me where a homeowner built a modest 2 bed bungalow on part of their garden and sold it on a few years ago, since then the bungalow has been bought, demolished and a huge detached house built which dwarfs the surrounding houses and utilises every inch of the plot with the exception of enough space to park a couple of cars.

Alternatively maybe they're hoping to enforce the covenant, force the demolition of the property, buy the "useless" piece of land back for a pittance, then build another house, rinse and repeat - it could end up being a decent ongoing income!

user1977

I suspect it was just a drafting error and they meant "not to build a house other than the one we know is just about to be built..."

But I'd expect people in the future to query it as well.

naynay

Unfortunately no mistake. They legally drew it up with their solicitor who is being used in selling it. Of course our conveyor asked this and asked for a Deed of release, which they refused.
 Really odd esp when accompanied with them not wanting to give build warranty.

Side Question: Now the estate agents are perfectly knowledgeable about the covenant should they let others know before they pay out for Surveyors, conveyor, and mortgage fees where applicable?