General legal issues

Restrictive covenants

Restrictive covenants

Restrictive covenants are to some extent an old planning mechanism enforced by neighbouring private individuals rather than the state.  Unlike other agreements these restrictions can bind people who never agreed to them in the first place. A buyer of the property may be subject to the restriction on use simply by buying the property.

  • A developer laying out an estate might wish to use restrictive covenants to ensure that marketing and other purposes that further building within the estate might be regulated by an estate management company, or that all or certain categories of property should only be used as residential premises, or sometimes also that freehold properties should only be used as family houses and not converted for use as flats or bedsits.
  • Individuals selling their property may also wish to impose restrictions on future use of the part that has been sold.
  • Charities very commonly take on buildings that were formerly large houses, where restrictive covenants that permitted only use as a single private residence were more or less the norm.
  • Sometimes a property may be gifted or sold to a charity at an undervalue, and a restrictive covenant imposed in order to ensure that the premises continued to be used for the purpose for which they were originally sold.  Such covenants are often very restrictive and may even (for example) only permit use for one particular charitable purpose.
  • The questions of whether restrictive covenants are actually enforceable and by whom,  and whether an injunction against further use by a charity would be available to any party able to enforce them are complex.
  • There are provisions permitting an application to the court to modify or change them under section 84 Law of Property Act 1925, usually for a price, or alternatively they can be negotiated away (again usually at a price).
  • If a restrictive covenant is registered against the property that appears to potentially restrict or prevent intended use of it by a charity, then it will usually be necessary for the charity to take legal advice.