REAL ESTATE

Is Your Home Really Your Castle?

Nowadays it is common to see individuals making a living from the comfort of their own homes. Whilst the convenience of a home business may seem attractive, homeowners should be vigilant to restrictive covenants within their title deeds. It is not at all untypical for title deeds to prohibit the use of a property for business purposes.

Similarly, property owners should be cautious when planning an extension or alteration to their property as title deeds often contain restrictions surrounding this.

In this summary Millar McCall Wylie Real Estate Solicitor Patricia Arrell explains the notion of restrictive covenants and how best to deal with them.

 

What is a restrictive covenant?

A restrictive covenant restricts the use of an owner’s land and essentially is a binding condition determining what a property owner can or cannot do with their property. The most common types of restrictive covenants referred to in title deeds can include:-

  1. Allowing only one residential property to be built;
  2. Prohibiting any trade or business carried on at a property;
  3. Prohibiting any alterations to a property;
  4. Prohibiting the sale of liquor at a property.

Restrictive covenants are not limited to older properties, new build developments often include a raft of restrictive covenants which can include the prohibition on parking any caravan or trailer in the development, the erection of a satellite dish or, indeed, the hanging of any washing out of windows or over balconies.

 

How to deal with a restrictive covenant

There are a few options to property owners when faced with restrictive covenants:-

Express release

It may be possible to negotiate the express release of a restrictive covenant where the owner of the covenant (usually the person to whom ground rent is payable) can be located. This however generally comes at a cost and accordingly could turn out to be expensive.

Insurance

A second option is to approach a title indemnity insurer to ascertain whether they would be willing to insure against the restrictive covenant. Insurance is generally the cheapest and quickest way forward. Where insurance is taken out, a restrictive covenant will stay on the title but the insurer will deal with any claims made in respect of the covenant.  It should be noted however that an insurer will not provide insurance if the property owner has already approached the party with the benefit of the covenant and so it is important that a property owner seeks legal advice before attempting to deal with a restrictive covenant.

Lands Tribunal

Under the Property (Northern Ireland) Order 1978, a property owner, provided that 21 years has passed from the creation of the restrictive covenant, can apply to the Lands Tribunal in Northern Ireland who have the power to modify or extinguish a restrictive covenant. When considering an application the Lands Tribunal will take into account a number of factors including the period and circumstances for which the covenant was created or imposed, any public interest in the land and any change in character of the land. One other key factor the Lands Tribunal will take into account is whether the covenant secures any practical benefit for the person who imposed it in the first place.

Restrictive covenants are a thorny issue and failure to properly deal with them can have an adverse effect on the future marketability of a property.

Should you require advice on restrictive covenants or any other property related issue please do not hesitate to get in touch with Patricia or any other member of the real estate team.

 

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