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Restrictive Covenants- what are they and how can you protect yourself from covenant disputes?

Congratulations, you’ve bought some new land! Brilliant, you can now start your new project, perhaps building new properties or moving your business onto the site… or can you?

What are Restrictive Covenants?

Restrictive covenants are sometimes imposed by a seller to prevent the buyer from using or developing the land in such a way that the seller feels could be damaging to the remaining land which the seller has retained.

Examples include an agreement not to erect buildings or run a business without the express permission of the developer. However, the most frequent time a covenant is broken is making alterations to an existing property without the consent from the appropriate third party, which is usually the builder.

How can you protect yourself from covenant disputes?

Ensuring the solicitor fully checks the title deeds prior to completion for covenants is extremely important. By signing the title deeds you are accepting you have fully read, understood and accepted the terms within it.

If it is thought a covenant has been breached, then a conveyancing solicitor must be employed. Here they will review the title deeds to see if the covenants are enforceable or not.

Sometimes it is easier to contact the original developer who imposed the covenant to see if they will grant ‘retrospective consent’. It is only when problems or disputes arise between neighbours that the issue of restrictive covenants become known.

How can One Indemnity help?

A more proactive way to protect yourself from covenant disputes is by securing freehold restrictive covenant indemnity insurance from One Indemnity. Providing the property will have continued use, the indemnity policy will provide protection against historic known or unknown breaches of covenants of 12 or more months ago.

Policies issued are in perpetuity and the premium is calculated on the gross development value of the property.

For more information on the range of products available from One Indemnity, call 01603 218232 or email us.

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