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17/02/2009

Power to change or remove restrictive covenants

Following on from last issue’s report on the restrictive nature of covenants, Tim Sharpely of Laceys Solicitors tells Estates Review how best to transform their capability

 

When restrictive covenants become “contentious” there are many remedies available. If negotiation has broken down, either the person claiming the benefit of the covenant, or that person wishing to breach the terms of the covenant, can apply to the Lands Tribunal (a type of court) for a release modification or compensation. The application is made under Section 84 of the Law of Property Act 1925 under which any person owning a freehold or long leasehold in land, affected by any such restrictive covenant, may apply to the Lands Tribunal to have the restriction discharged (cancelled) or modified (changed). The initial grounds of any such application are that any of the following:-

• The character of the property or the neighbourhood has changed so that the restriction ought to be deemed to be out of date (as a practical example every other house in your road has been redeveloped into flats).

• The continued existence of the restrictions would impede the reasonable use of the land for public or private purposes without any benefit to other people.

• Persons of full age and capacity have agreed to the covenants being discharged or modified. You can, in some cases, also argue for an implied Agreement to modify or discharge the covenants.

• The proposed discharge or modification would not damage the interest of the persons entitled to the benefit of them (in short the removal or change of the covenants would not make much difference to the owner of the covenants). A practical example of this would be that where the person owning the benefit of a the covenant could not even see the land in question due to trees having grown up between the two properties.

There is a legal procedure to be followed and legal advice is best sought which involves filing an application to the Lands Tribunal, publication of notices by the Lands Tribunal to all those affected, filing of objections by people concerned, and an oral hearing and appeal.

The risks can be very serious because if someone can show that they retain the benefit of the covenant and they can also show that they are able to enforce the benefit of the covenant they can obtain an injunction (a stop order) to prevent any further breach followed by an action for damages for their out of pocket expenses which can prove very expensive.

The Tribunal can order a range of orders including compensation to be paid to the person who loses the benefit of the covenants. Such compensation can run into many thousands of pounds.

Rather strangely, there is a peculiar costs rule in that the people objecting and opposing the application to the Lands Tribunal will be awarded all their costs if they are successful but the people seeking to have the covenants modified or discharged will always have to pay their own legal and experts fees even if they are proved right!

Part one of Tim Sharpely’s article on Restrictive Covenants can be found at www.estatesreview.com. Visit the Comment section and indicate the Legal Experts tab.

For more information, contact Tim Sharpely at t.sharpely@laceyssolicitors.co.uk or telephone Laceys Solicitors on 01202 557 256 or visit laceysolicitors.co.uk.

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