HELP PLEASE: the new build I am buying is in breach of covenant. Should I pull out?

Emily_in_uk

We are in the process of buying a new build semi-detached house, which is developped by a local developper. He bought an old detached house, then destructed it and constructed two new buid semi-detached properties.

Our solicitor just told us that the entire property had been constructed in breach of covenant. The seller did not obtain the necessary consent to build a second property on the site. This means that the construction of the property you are purchasing is in breach of the covenants contained in the title deeds.

He warned us that potentially the house can be removed or we will be charged the costs to obtain the consent, and what's worse, the breach of covenant can be enfored for a period of 20 years.

The seller doesn't want to obtain the deed of release and they could only offer to obtain indemnity insurance for it.

Our solicitor didn't give us a clear answer if we could conitunue this purchase or not. Should we walk away from this?

Many thanks for your suggestions or experiences to be shared.

Emily_in_uk

I would be grateful for any advice. 

user1977

How old is the covenant? Who is entitled to enforce it? If the developer is dozy enough not to have figured out this would be a problem, what other corners have they cut?

Emily_in_uk

Thanks for reply, 

Using my solicitor's word: whilst the covenants dated from the 1950s they could conceivably enforce the covenants which are still in existence and can be legally enforced.
Good question for who is entitled to enforce it:
" Potentially a third party could take action for breach of covenant in which case the structure would have to be removed, or costs paid to obtain retrospective consent."

Doozergirl

That's what indemnity insurance is for. 

Who is there to enforce the covenant now? What allows a third party to enforce? What kind of 'third party'? 

We have a similar covenant from the late 1930s.  It doesn't bother me, there's no one to remember or care.  The 1950s isn't exactly recent.  

It's conceivable, but it's not exactly likely!  

user1977

I presume there's nobody local who actually cares much about it, otherwise they'd probably have known about the planning application and have thrown a spanner in the works before now. And as the house becomes longer-established, obviously less of a risk. In practice if somebody came out of the woodwork who was entitled to enforce it, they'd probably take some money to go away, rather than actually want the house demolished. So insurance is probably a solution, but might be an awkward discussion if future buyers/lenders aren't comfortable with the position.

Emily_in_uk

Doozergirl said:

That's what indemnity insurance is for. 

Who is there to enforce the covenant now? What allows a third party to enforce? What kind of 'third party'? 

We have a similar covenant from the late 1930s.  It doesn't bother me, there's no one to remember or care.  The 1950s isn't exactly recent.  

It's conceivable, but it's not exactly likely!  

My solicitor found the limited company with the benefit of the covenants is still trading, who should have rights to enforce.
And I also pasted the original covenant

2. No building shall be erected upon any plot or plots except a single private dwellinghouse with suitable outbuildings but no outbuildings of any description shall be erected thereon without the previous consent of the Purchaser being obtained such consent however not to be unreasonably withheld.

Doozergirl

There's no reason for them to go back over old paperwork that they almost certainly don't have, though.  

Imagine going over 70 years of paperwork to see if anyone has built anything else on the land.   It would cost more in wages just looking before they ever found anything they might be able to benefit from.  

Knocking a house down is of no benefit to anyone.  Never going to happen.  

It's not a risk that I'd consider to be a risk at all.  An indemnity policy will suffice for that kind of risk.  

Thrugelmir

Emily_in_uk said:

 the covenants dated from the 1950s

Then they also need to be viewed in the context of their purpose at that time. 70 years later a lot may have changed. 

sheramber

A few years ago our vendor bought a house that they discovered had a covenant that no houses were to be built on that land.

The covenant was 100 years old and nobody knew who owned it.

The building society accepted an indemnity insurance to allow the mortgage to proceed.

lincroft1710

Doozergirl said:

The 1950s isn't exactly recent.  

Oi. DG, some of us can remember the 1950s quite vividly!!