and where no substantial advantage is to be gained – in such cases a monetary payment to the owner of the covenant may be ordered for its variation or discharge. It should be noted that the Law Commission published a consultation paper in March 2008 which considered the replacement of the existing law.
Issues for tenants Tenants of leasehold properties face different problems with regard to restrictive covenants as these covenants will always be enforceable by the landlord and as such it is not readily possible to obtain indemnity insurance for
breaches of covenant or make application to the Lands Tribunal, although there may be scope for either of these palliatives in the case of long leasehold houses. Flat leases contain a large number of restrictive covenants which
are necessary for the regulation of the development, alteration and use of a property which is in the same building as other properties. Breaches of these covenants may give rise to an application by the Landlord to the Court for forfeiture of the lease but generally the Court will require the leaseholder to put right the breach within a specified period or, where the breach cannot be remedied, to pay monetary compensation to the landlord. Often a landlord with limited financial interest in a building
which he has divided up and sold off on long leases, may be disinclined to pursue a leaseholder for breaches and it should be noted here that other leaseholders do not have a legal right to force the offending leaseholder to remedy the breach as there is no contractual relationship between one leaseholder and another. However, a properly worded lease can oblige the landlord to
take action against another leaseholder or, where the lease is deficient in this respect, indemnity insurance can be effected to protect the leaseholder against any loss he may suffer as a result of the other’s breach. Landlords may be prepared to vary or discharge certain
restrictive covenants but there will inevitably be a cost to pay and a landlord will not agree to such changes if to do so will leave him open to a claim by other leaseholders for loss of the quiet enjoyment of their own flats.
ClearIng up tItle prIor to sale A considerable portion of the conveyancing process is taken up in clearly establishing the title and any restrictive covenants that will impact on the property’s use and therefore its value. Owners looking to expedite the sale of their property should consider clearing up the title in advance, to remove any uncertainty that may undermine the value of the property or its attractiveness to prospective buyers. Sellers can limit the ability of prospective buyers to use covenants as an excuse to stall for time, wriggle on price or abandon their purchase late in the day if details of any restrictive covenant are disclosed up front. Once the terms of the restriction are understood by both parties an agreement can usually be reached – the challenge for the conveyancing solicitor is to find a legal workaround that will prevent a restrictive covenant from becoming a deal-breaker.
Graham Dorman is a partner at Knights Solicitors in Tunbridge Wells and has over 25 years’ experience in non-contentious property law. Visit
www.knights-solicitors.co.uk or call 01892 537311.
www.propertydrum.com/articles/covenants Do you have any views on covenants? Log on and add your comments.
PROPERTYdrum MAY 2011 33
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