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Don’t lose the plot over covenants
publication date: Jun 13, 2010
Covenants restricting what an owner of land or property can do with a property are extremely common. Covenants are private agreements between owners which may restrict the way land may be used and developed.
A landowner can put whatever restrictive covenant they want on the land they are selling. Some covenants might be old and the purpose for which they were originally imposed may not still exist or be reasonable. On the other hand, some covenants may be newly imposed by the vendors of the plot.
Infact, an individual selling a property may not even be aware of any covenants themselves. For instance, a widower might be selling a property that her husband had dealt with previously.
COVENANTS TO WATCH OUT FOR
Attending auctions across the UK means we come across all manner of unusual covenants dictating how residential property can be used. Some interesting on e s include:
Some of these may seem ridiculous but people should be aware they are legally binding and must be followed. If a property is coming up for auction and you find there is a restrictive covenant is in place, check out the expiry date. If it will soon run out, it shouldn’t be a problem but the bidders should be aware of it, all the same.
You can also find out details of any covenants within the information held by the Land Registry. It pays to thoroughly check out the deeds to the property as any covenants will be contained within this document.
Any covenants found on a home should be included – and highlighted – in the legal pack.
OLD LAWS STILL COUNT
It’s vital property investors realise that old laws might still restrict the use of new land, however outdated they may seem. If a buyer purchases a property and finds later that it has a covenant, he may well be able to modify or discharge it. If the original purpose of the covenant has become inappropriate over time, for example, the Lands Tribunal can have power to change it.
Christopher MacCafferty, associate at law firm Ralli, has some useful advice. “From a legal perspective, you must make checks when buying, particularly if you have plans to either alter the usage or physical characteristics of the property.
“Consider whether the property is subject to easements and covenants. Look at the Town and Country Planning Legislation and the need for planning permission and also check for building regulation consent.
“Before buying any property you must ensure the seller has complied with all of this and with any restrictions on the usage of the property and obtained any necessary consent. If you do have short or long term plans for the use of the property you also need to consider whether they would fall foul of any of the controls listed above.”
Agents should always suggest that bidders ask their legal representative for advice if they are unsure what is in place and the legal pack isn’t clear. The solicitor will be able to advise on whether the buyers plans for the property are currently possible and if not what is needed to make them possible. www.auctionfinance.co.uk