Building Covenants?

[Clodbuster]

My son is in the process of buying a building that is part of a development completed in 2020. He is buying from a person who bought from the developer. He has got quite far into the process.
He has (this week) discovered there are covenants on the building, No additions to the buildings, no un-domesticated pets, may not place "For Sale" signs (there was and still is one), cannot change the exterior of the building and may not park any vehicle bar a car less than 5m in length on the driveway.
Would that mean, cannot add a conservatory? Cannot park a boat, campervan, more importantly he is a plumber so has a van longer than 5m that he uses for business?
The estate agent would have been aware of the van as he pitched up to view the property in it but did not mention the covenant at all.
How are these covenants adhered to? Is it possible to get them removed?

My advice has been to back out unless the seller can get these removed. It will cost him some money as he has already had serveyors and lawyers involved.

 

[Newchodge]

He needs to speak to his lawyer.

 

[FreddyG]

Is it possible to get them removed?

Yes, of course, in most cases! But I doubt it will work with this one, as the covenants are too recent.

My advice has been to back out unless the seller can get these removed. It will cost him some money as he has already had serveyors and lawyers involved.

Every potential purchaser will baulk at these silly and pointless covenants. Unless the seller has them removed, he/they are stuck with the building, waiting for a sucker - who will never come and/or will fall through when their lawyer does the conveyancing.

Please note that the law on covenants varies between Scotland, NI, and England. As Cyndy says - talk to a lawyer! Or just back out and find something else!

As this is a recent development from just five years ago, my wild guess is that those covenants will hold and be hard to remove. It smells like a residential property that the developer did not want to see changed to any other use.

 

[Frank the Insurance guy]

Hi @Clodbuster ,

I am sure your son is using a conveyancer for the purchase - ask them for their thoughts.

Who is the "beneficiary" of the covenant - ie. who can enforce it.

If it is the neighbour or someone who will be directly impacted by your son's failure to comply, they are more likely to raise an issue with it.

If it is the developer, likely to be less of an issue.

As an alternative - you can get "restrictive covenant" insurance (usually cheapest through the conveyancer) These policies will pay out if someone pursues the covenant against your son, and will pay legal costs and worse case, the purchase price of the house!

 

[Clodbuster]

Who is the "beneficiary" of the covenant - ie. who can enforce it.

If it is the developer, likely to be less of an issue.

Not sure - as we read it it is the developer, my son is contacting his lawyer shortly.
How stupid is the covenant, only domestic animals, so that will include cows, horses, goats, sheep, chickens, Llama but not a lion or tiger.
The driveway is all of 15m long and does not mention broken down skedonks as long as they are less than 5m.
Spoken to 2 friends who are in new builds in other parts and they are not aware of covenants - are they common or is this a muppet of a developer.

 

[Clodbuster]

Should the Estate agent have known about them and required to tell my son about the covenants before it got this far down the road?

 

[Lisa Thomas]

Should the Estate agent have known about them and required to tell my son about the covenants before it got this far down the road?

I can't see how this would be the estate agent's place to advise. This would be something your son should be discussing with his solicitors.

 

[Frank the Insurance guy]

Not sure - as we read it it is the developer, my son is contacting his lawyer shortly.
How stupid is the covenant, only domestic animals, so that will include cows, horses, goats, sheep, chickens, Llama but not a lion or tiger.
The driveway is all of 15m long and does not mention broken down skedonks as long as they are less than 5m.
Spoken to 2 friends who are in new builds in other parts and they are not aware of covenants - are they common or is this a muppet of a developer.

I am only guessing, but I imagine these covenants are more relevant to the developer whilst the estate is being built (they may not want prospective buyers to see lots of vans and for sale signs up as this could affect sales) - once the estate is built and all homes sold, I'm sure they won't care!

The developers will not bother spending legal costs on enforcing a covenant that no longer affects them.

However, to have comfort, your son could buy a Restrictive Covenant policy (likely £200-£500 one off, for something like this).

 

[Clodbuster]

I can't see how this would be the estate agent's place to advise. This would be something your son should be discussing with his solicitors.

He would not have got the sale in the first place and has cost my son some expense. I think they have to notify a purchaser if there has been an argument with a neighbour.

 

[Frank the Insurance guy]

He would not have got the sale in the first place and has cost my son some expense. I think they have to notify a purchaser if there has been an argument with a neighbour.

Unfortunately, I understand it is not the estate agent's place to point these out - it is the conveyancers responsibility. Things like dispute with neighbours is down to the legal side of things (this usually forms part of the "sellers" pack).

I think most properties include some covenants of some sort (all properties we have bought include some), and agents are not the experts to know which do and don't matter.

The title deeds are available to all via land registry for a few quid before going through a purchase.

Out of interest - has your son driven around the estate and can see that others are breaching the covenant - if so, this provides further comfort that the developers do not care.

 

[fisicx]

He would not have got the sale in the first place and has cost my son some expense. I think they have to notify a purchaser if there has been an argument with a neighbour.

This is what the conveyancer does. Has nothing to do with the estate agent.

Some covenants are due to local bylaws. One example can be no on-road parking or parking on verges.

 

[Lisa Thomas]

He would not have got the sale in the first place and has cost my son some expense. I think they have to notify a purchaser if there has been an argument with a neighbour.

I think you might be saying your son would not have entered the sale in the first place had he known/understood the covenants?

Yes, buying property is expensive. If he doesn't pay for good legal advice now, it will cost him more in the future...

There doesn't seem to have been a dispute with a neighbour here...?

 

[Clodbuster]

I think you might be saying your son would not have entered the sale in the first place had he known/understood the covenants?

Yes, buying property is expensive. If he doesn't pay for good legal advice now, it will cost him more in the future...

There doesn't seem to have been a dispute with a neighbour here...?

No there hasn't been a neighbour issue but I feel it is a similar as it could affect a decision and may affect the resale value of the house. There was no mention of covenants and as it stands the sale is not going to go through unless the lawyer can convince him he mis-understands the issue.

 

[Newchodge]

He would not have got the sale in the first place and has cost my son some expense. I think they have to notify a purchaser if there has been an argument with a neighbour.

No, the seller has to notify the prospective purchaser.

 

[fisicx]

No, the seller has to notify the prospective purchaser.

Usually via a long form issued by the conveyancer. Last one we did had questions about covenants.

 

[DontAsk]

Labour are going to fix this https://www.bbc.co.uk/news/articles/cy0v7zwp0dlo

"Under new proposals, sellers and estate agents will be legally required to provide key information about a property up front."

 

[UKSBD]

How badly does he want to buy the house?

How badly do the sellers want to sell it?

He basically has a good reason now to either offer a lower price or get the sellers to sort the problem before he goes any further.

 

[jimbof]

No, the seller has to notify the prospective purchaser.

Do they even have to do that? I mean, in the strictest sense.
The buyer's conveyancer should usually send form TA6 and once (if) completed it's a legal document that can prove important in the case of issues down the line, but there's no actual requirement to compel completion of the form.

 

[DontAsk]

Do they even have to do that? I mean, in the strictest sense.
The buyer's conveyancer should usually send form TA6 and once (if) completed

I would run a mile from any vendor who refused, or any solicitor, or conveyancer, who accepted refusal.

No ifs, no buts.

 

[Clodbuster]

So it must go as far as the conveyancer gets involved and asks for his pound of flesh. The sale would not have got to that stage if the agent is required to inform a prospect of anything that will impact a sale. In the meantime a surveyor has also been hired un-necessarily. Now that this sale has gone p-tong the agent will be able to say a survey has been done without issue - all the while keeping shtum even 'tho he now knows there is a covenant issue.

 

[UKSBD]

Do they even have to do that? I mean, in the strictest sense.
The buyer's conveyancer should usually send form TA6 and once (if) completed it's a legal document that can prove important in the case of issues down the line, but there's no actual requirement to compel completion of the form.

When I bought my last house, they just said "Sold as seen" and wouldn't answer other questions. (ex housing association property)

 

[jimbof]

I would run a mile from any vendor who refused, or any solicitor, or conveyancer, who accepted refusal.

No ifs, no buts.

Me too, but I understand it's reasonably common - eg if buying from a professional executor who simply has no knowledge. Or for form to be completed and all the boxes to simply say "Seller is unaware of..."

 

[fisicx]

@Clodbuster - the new updated TA6 can be issued by the estate agent. Ask your agent why they didn’t.

 

[Chris Ashdown]

Would I be right that regardless of any actions on the developer to enforce the covenant, other home owners on the same development with the same conditions could take legal action against someone breaking the covenant. In my own case caravans were banned but on writing to the developer i received written agreement to have a caravan

 

[fisicx]

Would I be right that regardless of any actions on the developer to enforce the covenant, other home owners on the same development with the same conditions could take legal action against someone breaking the covenant. In my own case caravans were banned but on writing to the developer i received written agreement to have a caravan

Yes, if they are a beneficiary of the covenant. This is lawyer land as the specific wording is important.

 

[Newchodge]

Yes, if they are a beneficiary of the covenant. This is lawyer land as the specific wording is important.

From memory of my law degree (30+ years ago) the covenant can only be enforced by the original covenant beneficiary if they still own property affected by the covenant.

 

[Mark T Jones]

First off, I'd never start with the assumption that estate agents are in any way honest. There are good, honest ones out there, but unfortunately they are drowned out by the noise of the spiky-haired tell-you-what-you-want-to-hear merchants.

Apart from the legalities & technicalities, from experience it really depends on how you treat the covenants and the neighbours. My last house had a covenant forbidding running a business from the property. Out of 5 houses, 3 of us ran businesses - which involved sitting at a computer in a room, so nobody cared.

On the other hand, if you plan to park a truck in front of the neighbour's window, you can expect some push-back

 

[Clodbuster]

The Estate agent admitted this morning that the same reason was given for the failure to complete in March on the same building. This is now done and dusted.

 

[jimbof]

The Estate agent admitted this morning that the same reason was given for the failure to complete in March on the same building. This is now done and dusted.

That's interesting for them to have volunteered that, and I wonder if in that case your son may have a claim against them - was it with the same estate agent? Have they just found out this information?

I >think< their is an onus on businesses to communicate information that they are aware of and would be used in your decision making process to proceed or not.

 

[Frank the Insurance guy]

Would I be right that regardless of any actions on the developer to enforce the covenant, other home owners on the same development with the same conditions could take legal action against someone breaking the covenant. In my own case caravans were banned but on writing to the developer i received written agreement to have a caravan

In my experience of seeing these, the neighbours, other homeowners are not the beneficiaries and therefore have no legal right to enforce it. However, they can contact the beneficiary (ie. the developer) to make them aware. Whether the beneficiary then takes action all depends on whether they can be bothered!

 

[Clodbuster]

In my experience of seeing these, the neighbours, other homeowners are not the beneficiaries and therefore have no legal right to enforce it. However, they can contact the beneficiary (ie. the developer) to make them aware. Whether the beneficiary then takes action all depends on whether they can be bothered!

Then why the hell have these non sensical, stupid covenants. I hear they are becomming more prevalent. Down right ridiculous.
Why should I buy a property if I have to rely on someones inaction? The house belongs to me and there are enough legal, both national and regional, restrictions that they are largely covered anyway.

 

[fisicx]

Then why the hell have these non sensical, stupid covenants. I hear they are becomming more prevalent. Down right ridiculous.
Why should I buy a property if I have to rely on someones inaction? The house belongs to me and there are enough legal, both national and regional, restrictions that they are largely covered anyway.

Because that how the law works. It stops people parking caravans and huge trucks where they don’t belong, keeping properties in good order, preventing massive fences being erected and so on.

Consider also not all properties are freehold. The developer could still own the land.

 

[Frank the Insurance guy]

Then why the hell have these non sensical, stupid covenants.

There would have been a relevant and purposeful reason at the time! Now it probably serves no useful purpose for the developer.

If this is your son's ideal home - get him to speak to the conveyancer about it and ask them for an insurance quote to cover restrictive covenants. Its really not expensive and will give your son comfort!

 

[Michael Loveridge]

As an alternative - you can get "restrictive covenant" insurance (usually cheapest through the conveyancer) These policies will pay out if someone pursues the covenant against your son, and will pay legal costs and worse case, the purchase price of the house!

You wouldn't be able to get insurance in this sort of situation. RC insurance is only available when there's virtually no chance of the covenant being enforced, such as a covenant in a deed that's 100 years old.

 

[Michael Loveridge]

Should the Estate agent have known about them and required to tell my son about the covenants before it got this far down the road?

It's extremely unlikely that the estate agent would have known about them - even many house owners don't know about them until they come to sell.

 

[Michael Loveridge]

From memory of my law degree (30+ years ago) the covenant can only be enforced by the original covenant beneficiary if they still own property affected by the covenant.

Not so. Many restrictive covenants can be enforced by neighbours, particularly if the development is classed as a `building scheme'. And even if it's not, many deeds include a provision specifically allowing the owner to enforce the covenants against their neighbours.

 

[Clodbuster]

It's extremely unlikely that the estate agent would have known about them - even many house owners don't know about them until they come to sell.

The agency did know as they admitted that was the reason a previous transaction fell through.

 

[WaveJumper]

Pretty sure this has already been mentioned, these covenants could go all the way back up the ladder to the local planning office. Having moved around the country many times in the past this is not uncommon in the least, you might even have covenants to stop you building a wall around your front garden.

Yes this is why you pay for legal advice BUT would you trust you solicitor or anyone else to point out all the "downsides" (they may not see many of the above items as a downside) I certainly wouldn't trust them. Get your highlighter pen out, read through all docs ..... highlight anything you don't understand or agree with.

And I certainly wouldn't trust an estate agent, yes it's very (bloody) annoying how far you can get into a purchase then find there are "hidden" pitfalls. One could be forgiven for thinking the lawyers love all this stuff.

 

[fisicx]

The agency did know as they admitted that was the reason a previous transaction fell through.

That may be so. But they are not obliged to tell you anything. They are acting on behalf of the seller not the buyer.

Even if they have the covenant they probably won't have read it (in the same way they never read leases). And if they have read the documents they aren't qualified to comment on the content.

 

[Clodbuster]

That may be so. But they are not obliged to tell you anything. They are acting on behalf of the seller not the buyer.

Rather like the car sales people selling car finance - they shouldn't have to tell their customers where the money goes too, just sign on the dotted line and pay. They are also acting for the seller. All you are promoting is bad business ethics. Let the Buyer beware.