When clients purchase their new home they often assume that their new property is their own and they are free to modify and change their property as much as they like, subject to the usual Local Authority planning and building regulation obligations etc.
Clients are often confused when certain restrictions called ‘restrictive covenants’ are pointed out to them by us during the house buying process, restricting what they can and cannot do with their own property. Sometimes we have to point out to sellers that during the course of their ownership, they have breached a restrictive covenant within the title to their property.
A restrictive covenant is a restriction or obligation placed on owners of property by the seller. These are legally binding obligations and can be enforced if proven to be breached. Restrictive covenants are commonly included in the transfer deed on a sale.
When a house is built, there are normally restrictions placed on the owner, for example, not to run a business from the property, to only keep domestic animals, not to build above a certain height or not to erect aerials above the roof line. This list is endless and the older the title to the property, the more absurd some of the restrictive covenants become. Restrictive covenants can actually cover a broad range of issues but one of the most frequently broken is in making alterations to an existing property without obtaining consent from the appropriate third party, which is often the original builder.
During a sale, or a purchase, if it becomes clear that a restrictive covenant has been breached, it is possible to remedy this by obtaining an indemnity policy to indemnify the new owner against the breach, assuming that there is no ongoing dispute regarding the breach. An Indemnity Policy is a standard policy available for a one off premium. The premium is based upon the purchase/sale price of the property and therefore varies. It is usual for the seller to pay for the Indemnity Policy for the benefit of the buyer however this is not a legal obligation and therefore if the seller refuses, the buyer would be given the option to purchase the policy to indemnify themselves.
Please contact our offices in Lincoln, Boston, Spalding, Sleaford, Grantham and Newark for all your conveyancing requirements.