What are Restrictive Covenants?
Restrictive covenants are agreements restricting the use and enjoyment of land. They may prevent the development of and realisation of value from land.

One or more parties will have the benefit of a restrictive covenant for their land and one or more parties’ land will be burdened by the restrictive covenant.

Restrictive covenants are negative in nature. E.g. not more than one dwelling to be built or not to use the property for residential purposes.

Restrictive covenants affect both freehold and leasehold interests.
Why do they matter?
If land is affected by restrictive covenants and are simply ignored, any development that is undertaken in breach of that restrictive covenant could be liable to being halted and pulled down.

Alternatively, a significant damages claim may be secured by the person with the benefit of the covenant.

In either scenario the development’s value could be negated or even turn an asset into a liability.
Are they enforceable?

Whether a restrictive covenant is enforceable is not straight forward and requires specialist advice.

There are a number of technical reasons why a restrictive covenant may not be enforceable including registration issues, whether the benefit and burden of the covenant still benefits and restricts the respective land holdings and whether competition / public law may come into play.
Indemnity Insurance Policy Cover

You may have an insurance policy which could cover certain risks of a claim being brought against you by someone with the benefit of a restrictive covenant. However, the policy’s scope should be carefully scrutinised to determine exactly what claims it may cover and whether it would also cover professionals’ fees.
What can you do if you are uncertain as to whether a Restrictive Covenant is enforceable?

It can be difficult to determine whether a restrictive covenant will be found to be enforceable by the courts. You can, however, seek a declaration from the courts to determine the issue before you commence any development.

You could always approach the person with the land which is benefitted by the restrictive covenant, if known, to seek a release from that covenant. However, it would be sensible to first seek professional advice as it is possible that such an approach may make the situation worse or you may not be able to achieve the maximum results from an initial approach without such advice.

You should also be careful not to approach anyone before checking whether this may invalidate any insurance policy / prevent the procurement of any insurance policy.
What if you are certain that the Restrictive Covenant is enforceable?

If it is considered that a restrictive covenant is enforceable then all hope is not lost. Apart from agreeing a deal direct with the person/people who may have the benefit of the covenant, you may be able to apply to the tribunal to discharge or modify the restrictive covenant on various grounds.

The most common grounds for such an application are on the basis that the covenant is obsolete and/or it no longer confers a practical benefit to the person’s land with the benefit of the covenant.
The Team at Hägen Wolf have long standing experience of working with developers and private landowners to navigate the issues relating to restrictive covenants and other development issues such as right to light claims, trespass, boundary disputes, right of way disputes, overage disputes and the termination of tenants and telecommunication operators’ occupational rights.