Covenants: What they are and why they are important
Published: 3rd October 2023
Before I begin, let’s cut through the usual solicitor jargon and ‘legalese’ by explaining what as a profession we mean by the word ‘covenant’. A covenant is simply a promise. If you break that promise, you either have to pay the person it was given to, or put good whatever you have done wrong to break it.
In England, there are two types of such a promise given. These are Restrictive or Positive. A Restrictive Covenant is a promise not to do something, such as, ‘not to build on the garden without permission’ whereas a Positive Covenant is a promise that you will do something, such as ‘to pay towards the maintenance of the wall.’
The difference is important as promises which are restrictive run with the property and therefore, in theory, stay around forever unless they are removed by deed. This means that anyone who buys the property following the original purchaser from new build will be bound by the same promises not to do something.
Positive promises, on the other hand, in general, do not run with the property and are merely personal. Therefore, a promise to maintain a wall will only bind the two original parties who signed it. I say in general, as there are ways to make a positive promise carry over to future buyers. The way this is most commonly done is that some deeds will include a need for a ‘Deed of Covenant’. This is a document signed by a deed whereby every new purchaser agrees to keep the promises given by those before them. In such circumstances, positive covenants do bind whoever lives in the property.
Why are Restrictive Covenants placed on title?
Usually, a developer or builder of a new build property will place such promises in their transfer documents for one of three reasons. Firstly, they need to comply with the planning permission which granted them the right to build. In such circumstances, we see promises such as ‘not to extend or alter the Property without the prior permission of the developer and the Local Authority.’ Secondly, they may wish for an element of uniformity or for an area to stay as built for a while, so they don’t want anything unsightly on show. In such circumstances, we often see covenants such as ‘Not to hand washing outside’ or ‘Not to place a satellite dish or aerial so as can be seen from the road.’ Thirdly, a restrictive covenant can help to keep an area pleasant, and reduce the risk of noise or nuisance. Covenants such as ‘Not to keep noisy animals at the Property’ and ‘Not to allow the garden to become overgrown’ are usual.
Each development or property is relatively unique, so you need an experienced residential property solicitor to check through these to ensure that they will not affect the property unduly. A promise which is too tight can stop your enjoyment of the Property, as well as maybe putting off future purchasers or mortgage lenders. Your solicitor should also encourage you to read through any such promises to make sure you can stick to them and they will not affect you. For example, a covenant of ‘Not to use the Property for any trade or business, with the exception of a doctor, dentist or solicitor’ (which is rather common) is not good for you if you run a nail bar from home. You will be the ones living at the property and so if you have any concerns that you might break a promise, raise this with your solicitor who will be able to advise as to your next options.
Why are Positive Covenants placed on title?
Positive covenants or promises are usually placed on title to secure a payment or contribution towards something. Older conveyances usually contain provisions that walls or fences need to be built or maintained. More modern conveyances on estates usually have provisions that a buyer must pay towards a management company or towards maintenance of the roads or sewers etc. These are particularly important if it is not intended that the roads or sewers will be taken over by the Local Authority or the Water Authority, as the case may be. If everyone who lives on the estate is to contribute, you need to make sure that everybody is contributing. In this circumstance, it is common to see the request for the deed, tying every new person to the estate in to the maintenance charges. This is designed to work for the good of everyone.
Covenants, being promises, can be complex in their nature. We would therefore strongly advise that you use a solicitor used to dealing and understanding covenants. At Liddy’s, our conveyancing fee earners are widely experienced and can discuss any concerns or questions you may have, as well as properly advising you in this important area.
If you are considering purchasing a property, why not give Liddy’s a call?