100 Year Old Restrictive Covenants Still Enforceable under Building Scheme
Many properties in England & Wales have covenants on their legal title which regulate the use of the property and restrict development. A great deal of these covenants can be hundreds of years old, with many homeowners believing that these are now unenforceable.
However, the recent case of Birdlip Ltd v Hunter & Hunter, demonstrated just how careful property owners should be when restrictive covenants affect their title.
In this case, a company that owned a piece of land with one house on it, had obtained planning permission to build two further houses on the land. However, a restrictive covenant, which the neighbours of an adjoining property were attempting to enforce, prevented building further on the land.
The properties in question had originally been sold by the same vendor in 1909 and 1910. At that time the 18 plots of land did not have any buildings on them and each plot was subject to similar covenants preventing the owners from building more than one or two detached residences on it. The covenants were stated to bind purchasers’ and vendors’ “heirs and assigns”. The original vendor also reserved a right to vary the covenants “in so far as regards the other parts of their Estate”. The problem was, that the “Estate” was not defined in the conveyances, but was marked on two unidentical plans dated 1908 and 1914.
The company therefore issued an application in the Upper Tribunal to modify or discharge the covenants under the Law of Property Act 1925 s.84(1). Those proceedings were transferred to the High Court, to be heard together with its claim for a declaration that it was not bound by the restrictive covenant under s.84(2).
The court was required to determine whether the covenants were enforceable under a building scheme for the benefit of the other properties on the estate. The company submitted that there was no defined estate and therefore it could not been established that the covenants were for the benefit of other purchasers as opposed to the vendor.
However, it was held that a building scheme had in fact existed, for the benefit of the purchasers of the lots of land, as the restrictive covenants attached to each lot were substantially the same and had been in existence for over 100 years. Accordingly, the current owner of one of the lots was bound by the covenants and could not build further houses on it. What is more, an owner of a lot could also enforce these against another owner.
There was however one difficulty. For this to be enforced, the extent of the estate would need to be identifiable. Whilst, there was no evidence that any plan formed part of the conveyances of the land, the1908 plan had been attached to a contract for a lot sold in that year. That plan identified the lots for sale and also purported to define the boundaries of the estate. The court held that it was not speculation to infer that when the first lot was sold in 1906 there was a plan which defined the boundaries of the estate in the same way as the 1908 plan. When the parties’ properties were sold in 1909 and 1910, there would have been a plan attached to the agreement for sale. It might not have been identical to the 1908 plan and the shape of some of the lots might have altered but the boundaries would still have been defined in the same way.
In addition to the above, the estate also had many of the classic features of a building scheme, such as the land being defined as an estate, the fact it was laid out in lots and that each lot seemed to contain the same covenants from a similar form of contract. For this reason it would seem evident that the intention of the covenant should be for the common benefits of the purchasers/owners of each lot.
It was also significant that the covenants had been in existence for over 100 years and were treated as enforceable by purchasers in two cases before the Lands Tribunal.
This case demonstrates the difficulty of proving the surrounding circumstances and parties’ intentions where restrictive covenants were imposed a long time ago. In this case, on the balance of probabilities, it was held that the intention was that the covenants were for the common benefit of the purchasers as well as the original vendor, so the company will be unable to develop their land further.
The essential points to consider, when purchasing a property which is affected by restrictive covenants, is who has the benefit of the covenant and who can still take action against you for a breach. Considering these points at an early stage could prevent wasted expense and unwanted suprises further down the line.
Please contact us for further information.