Restrictive covenants affecting land

A restrictive covenant is an agreement whereby one party promises to refrain from doing something in relation to their land for the benefit of another person’s land.

A restrictive covenant may be required for a variety of reasons, although some common examples include:

• to prohibit certain businesses or trades taking place on the land
• to restrict the use of the land in some way
• to forbid certain building works, alterations
• additions on the land without the consent from the person owning the land with the benefit of the covenant.

The restrictive covenant will be enforceable by the original parties to the agreement as a matter of the doctrine of privity of contract. When the land is sold by the original contracting parties, the restrictive covenant will still continue to bind against the land. The effect of this is that a successor in title will be able to enforce the covenant against the other party’s successor in title, and so on.
Due to its on-going attachment to the land, it is important that the existence of any valid restrictive covenants that burden the land are identified before exchange of contracts, along with the benefit of any restrictive covenants that bind against the land.

We have discussed that restrictive covenants are enforceable between the original parties to the agreement and also their successors in title. Whether the restrictive covenant can actually be enforced by the parties will depend on whether the restrictive covenant has been protected by registration. Our course of investigation to establish this will differ depending on whether we are dealing with registered or unregistered land.

For registered land, a restrictive covenant created since 13 October 2003 requires registration at the Land Registry as a notice in the charges register of the title of the burdened land (s 32(1) Land Registration Rules 2002; “LRA 2002”). Any covenants created before this date also require registration in the charges register, but are governed under the Land Registration Act 1925, and will continue to hold their protection under the LRA 2002.

In contrast, a restrictive covenant burdening unregistered land requires registration as a class D(ii) land charge at the Land Charges Department at the time the covenant was created. A land charge requires registration against the full name of the estate owner of the burdened land at the time, as opposed to registration against the land itself. In practice, this means the burden of the restrictive covenant only needs to be correctly registered against the original party in order to bind against any successor in title of the land. This is why it is integral that land charges searches are carried out against the name of each estate owner of the unregistered land to ensure all interests burdening the land are discovered.

We must also consider how to establish whether the land benefits from a restrictive covenant. For registered land, the benefit of the covenant will be noted in the property register of the title of the land. However, it may be the case that a restrictive covenant benefits the land, although it has not been registered on the title. For this reason we must ensure we obtain sufficient replies to pre-contract enquiries, carry out a physical inspection of the land, and investigate the title registers of neighbouring properties which may be subject to the burden of the covenant.

If the land is unregistered, the benefit of the restrictive covenant cannot be registered. To ensure we discover restrictive covenants that benefit the land, we must carry out a similar process of reviewing replies to pre-contract enquiries, carrying out a physical inspection of the land, and carry out a thorough investigation of the title deeds of the property.