Modification and discharge of restrictive covenants!
In the matter of an application by Paul Holden (2018)
Many properties are bound by restrictive covenants, which restrict the use to which the property in question may be put. Restrictive covenants are binding upon the land but may be modified or discharged by an application to the Lands Tribunal under section 84 LPA.
There are four separate grounds to have a covenant modified or discharged which, in brief terms, are as follows:
- the restriction is deemed obsolete; or
- the restriction impedes some reasonable user without securing substantial benefits; or
- the restrictive covenant is impeding the proposed user contrary to the public interest; or
- the proposed modification or discharge will not injure the persons entitled to the benefit of the restriction.
In this case, a house owner (Mr Holden) had purchased a house on a new estate in 2012 which contained a restriction preventing business use. He converted his garage into a dog grooming parlour and whilst he obtained the relevant change of use under planning legislation, he had not obtained a discharge of the restrictive covenant. He made an application to the Lands Tribunal under 1 and 4 above.
The Land’s Tribunal did not consider the restrictions obsolete; there had been no material changes in the character of the land or character of the neighbourhood, and nor were there any material change of circumstances such that the restrictions could be deemed obsolete. Of course, it was noteworthy that the restrictions had only fairly recently been put in place in any event.
However, the Tribunal did modify the covenant relying on the basis of 4 above. The covenant was modified to enable Mr Holden’s current use to continue and making the modification of the restrictions personal to him. No one had objected to the removal of the restrictions or modification of them and there was no evidence that Mr Holden’s business caused any annoyance to owners of nearby properties. Whilst this was not conclusive, it was a significant indicator of an absence of injury.
- When faced with a restrictive covenant, a landowner may apply to the Lands Tribunal to have it removed or modified.
- It is important to carefully assess which of the four grounds under the Act may be relied upon.
- There are sometimes opportunities to argue in any event that the restrictive covenant is unenforceable and declaratory relief can be obtained from the Courts.
- More generally, if a party wants to obtain insurance in respect of a restrictive covenant, legal advice should be sought immediately and no correspondence should be sent to any party with the potential benefit of the restrictive covenant as this may preclude the obtaining of insurance.