166 thoughts on “Restrictive covenants on property”
In the UK I bought a house with Covenant. The Covenant say there’s a management company for maintaining particular assets. Those particular assets are maintained by the company in which the residents should be handed the shares to. This hasn’t happened, therefore is the Covenant actually enforceable?
What it sounds like is that you purchased a leasehold property with a tripartite lease. This is a common arrangement whereby the flat owner owns and is responsible for their own flat but the landlord, who owns the other parts of the building (such as communal areas and the like) has passed on responsibility for looking after these areas to a management company. That management company is owned and operated by the tenants themselves (by virtue of their being shareholders, and probably directors) giving them more control over how the building as a whole is maintained.
If your question is does a flat owner have to be a registered as a shareholder to be able to enforce the obligations on the management company to carry out its functions, the answer is probably not. The lease itself should grant the flat owner the necessary rights to oblige the management company to take carry out its functions, if it is failing to do so.
Some caution should be exercised in this respect. Most management companies owned and operated by the leaseholders will collect service charges in order to maintain the building. Those service charges are likely to be held on statutory trust. This is to protect them from creditors and to make sure that they are applied for the purposes for which they were collected. If you are contemplating a claim against a management company, you should seek legal advice on your ability to recover any expense that you incur, as the management company may not have any assets of its own to discharge that financial liability, only service charges that it has collected which might not be available to creditors.
Hi, I am thinking of buying some land with historical overage clause imposed in the late 1980’s and is by way of a restrictive covenant. It states no residential or commercial buildings can be erected on the land without consent but if planning is obtained for residential or commercial buildings and that planning obtains the maximum increase in the value of the land, the covenant will be released on payment of 50% of the increase in value.
What does it mean I need to pay if I apply and am successful in getting planning for a house ? Is such a restrictive covenant still valid after more than 30 years ?
We cannot give specific advice on our website. We need to look at documents and consider the position as a whole in any event.
What we can say is that you should exercise caution and speak with a solicitor.
An overage agreement will not automatically end and neither will a restrictive covenant after a period of time. There are complex legal points to consider regarding what are called “perpetuities” and some academic debate regarding such matters. Broadly, the law looks to prevent someone from exercising control over private land for an excessive period of time (e.g. after their death), however it is a very complex subject area.
However, on the assumption that the overage agreement is valid and enforceable, it will bind a purchaser and a purchaser would have to abide by its terms.
Hi My property has a covenant to pay fees for a management company, this company runs a members club, it is not in a good financial situation, fees are getting out of control. Is there anything i can do to remove or take this matter further with the company? It says the covenant runs for 80 years, is there anything i can do, how do hold this company accountable? Except under an Order of the registrar no transfer or lease by the proprietor of the land in this title or assent by his personal representative is to be registered unless a Certificate signed by the Secretary of—- ,has been furnished that such transfer lease or assent does not contravene any of the provisions of the Transfer dated 29 April 1987 referred to in the Charges Register.
We are not certain of the context in which the management company is paid, but we assume that it is a leasehold management company and that the “member’s club” that you refer to is a committee of other leaseholders or directors of the management company.
Yes, if you believe that funds you are obliged to pay under your lease to discharge the management company’s functions are excessive or being misapplied, you can take action. Such fees will generally have to be “reasonable”.
Ultimately, if you cannot resolve the matter informally with the management company, you can apply to the First Tier Tribunal (Property Chamber) under Section 27A of the Landlord and Tenant Act 1985 for a determination of the reasonableness of any charges being rendered.
It is very difficult to unpick, the members club is a propraitry club, my deed says I have to pay the fees, there is an deed of trust and we have shares in the Ltd company, all residents seem to have no to help or complain to as they are ruining at a massive loss! Could your firm help?
We are not sure what more we could add to our previous comment. Realistically we would need to consider the deeds in some detail before we could form a view.
Yes we could potentially assist with matters, subject to the availablilty of someone to take the matter on for you. However, this is not to say that we would be able to give you the advice you wanted to hear. These matters are often complicated and we would need to consider the position with you in some detail to enable you to make an informed decision.
You would be better off telephoning us on 01376 326868 if you wanted to instruct us, rather than corresponding on our website (we aren’t always that quick to reply to comments here). We are a very approachable bunch and happy to have a quick chat to see where we might be able to help.
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In the UK I bought a house with Covenant. The Covenant say there’s a management company for maintaining particular assets. Those particular assets are maintained by the company in which the residents should be handed the shares to. This hasn’t happened, therefore is the Covenant actually enforceable?
Thank you for your comment.
What it sounds like is that you purchased a leasehold property with a tripartite lease. This is a common arrangement whereby the flat owner owns and is responsible for their own flat but the landlord, who owns the other parts of the building (such as communal areas and the like) has passed on responsibility for looking after these areas to a management company. That management company is owned and operated by the tenants themselves (by virtue of their being shareholders, and probably directors) giving them more control over how the building as a whole is maintained.
If your question is does a flat owner have to be a registered as a shareholder to be able to enforce the obligations on the management company to carry out its functions, the answer is probably not. The lease itself should grant the flat owner the necessary rights to oblige the management company to take carry out its functions, if it is failing to do so.
Some caution should be exercised in this respect. Most management companies owned and operated by the leaseholders will collect service charges in order to maintain the building. Those service charges are likely to be held on statutory trust. This is to protect them from creditors and to make sure that they are applied for the purposes for which they were collected. If you are contemplating a claim against a management company, you should seek legal advice on your ability to recover any expense that you incur, as the management company may not have any assets of its own to discharge that financial liability, only service charges that it has collected which might not be available to creditors.
Hi, I am thinking of buying some land with historical overage clause imposed in the late 1980’s and is by way of a restrictive covenant.
It states no residential or commercial buildings can be erected on the land without consent but if planning is obtained for residential or commercial buildings and that planning obtains the maximum increase in the value of the land, the covenant will be released on payment of 50% of the increase in value.
What does it mean I need to pay if I apply and am successful in getting planning for a house ? Is such a restrictive covenant still valid after more than 30 years ?
Thank you for your comment.
We cannot give specific advice on our website. We need to look at documents and consider the position as a whole in any event.
What we can say is that you should exercise caution and speak with a solicitor.
An overage agreement will not automatically end and neither will a restrictive covenant after a period of time. There are complex legal points to consider regarding what are called “perpetuities” and some academic debate regarding such matters. Broadly, the law looks to prevent someone from exercising control over private land for an excessive period of time (e.g. after their death), however it is a very complex subject area.
However, on the assumption that the overage agreement is valid and enforceable, it will bind a purchaser and a purchaser would have to abide by its terms.
Hi My property has a covenant to pay fees for a management company, this company runs a members club, it is not in a good financial situation, fees are getting out of control. Is there anything i can do to remove or take this matter further with the company? It says the covenant runs for 80 years, is there anything i can do, how do hold this company accountable?
Except under an Order of the registrar no transfer or lease by the proprietor of the land in this title or assent by his personal representative is to be registered unless a Certificate signed by the Secretary of—- ,has been furnished that such transfer lease or assent does not contravene any of the provisions of the Transfer dated 29 April 1987 referred to in the Charges Register.
Thank you for your comment.
We are not certain of the context in which the management company is paid, but we assume that it is a leasehold management company and that the “member’s club” that you refer to is a committee of other leaseholders or directors of the management company.
Yes, if you believe that funds you are obliged to pay under your lease to discharge the management company’s functions are excessive or being misapplied, you can take action. Such fees will generally have to be “reasonable”.
Ultimately, if you cannot resolve the matter informally with the management company, you can apply to the First Tier Tribunal (Property Chamber) under Section 27A of the Landlord and Tenant Act 1985 for a determination of the reasonableness of any charges being rendered.
It is very difficult to unpick, the members club is a propraitry club, my deed says I have to pay the fees, there is an deed of trust and we have shares in the Ltd company, all residents seem to have no to help or complain to as they are ruining at a massive loss! Could your firm help?
Thank you for your further comment.
We are not sure what more we could add to our previous comment. Realistically we would need to
consider the deeds in some detail before we could form a view.
Would you be able to help in this matter?
Thank you for your further comment.
Yes we could potentially assist with matters, subject to the availablilty of someone to take the matter on
for you. However, this is not to say that we would be able to give you the advice you wanted to hear.
These matters are often complicated and we would need to consider the position with you in some
detail to enable you to make an informed decision.
You would be better off telephoning us on 01376 326868 if you wanted to instruct us, rather than corresponding on our
website (we aren’t always that quick to reply to comments here). We are a very approachable bunch
and happy to have a quick chat to see where we might be able to help.