Property Owners – Watch Out for Restrictive Covenants!

Restrictive covenants that can place serious constraints on property owners' use of their land lurk in many old title deeds and it often needs a professional eye to detect them. In one case, however, a woman succeeded in modifying one such covenant which stood in the way of her residential development plans.

The woman, who lived on a housing estate, had obtained planning consent to build two new homes on a plot of vacant land that adjoined the garden of her home. The plot was subject to a restrictive covenant, dating back to the 1930s, which prohibited its development and restricted its use to communal recreation.

The plot, which was originally in communal ownership, had passed into private hands in 1952. It had been fenced off and no communal recreational use of it had been made for more than 60 years. A number of the woman's neighbours, however, objected to her plans and argued that they should be paid up to £750,000 in order to compensate them for the release of their rights under the covenant.

The Upper Tribunal (UT) rejected the woman's arguments that the covenant could no longer achieve its original purpose and was thus obsolete. However, it accepted that the new homes would be in keeping with the character of the estate and that their construction would cause no substantial disadvantage to her neighbours.

The UT amended the covenant so as to enable the development to proceed. It also ruled that no compensation was payable to the neighbours on the basis that, by impeding the house-building plans, the covenant did not secure for them any practical benefits of substantial value or advantage.

In the Matter of an Application Under Section 84 of the Law of Property Act 1925 by Sunita Surana.