A Restrictive Covenant is an obligation based upon the owner of land to stop him from using that land for a specific purpose.
In some cases, covenants, unlike simple contractual arrangements between two or more parties, can attach to land and ‘run with the land’ thus binding owners of that land into the future. For this reason, in England and Wales, covenants must be registered against the registered title of land.
A Restrictive Covenant might prohibit a landowner from using land for a specific purpose (such as storing a caravan for example). This is also known as a negative covenant. There are also positive covenants that might require someone to do something specific.
Sometimes a covenant might seem to be restrictive in nature and therefore a negative covenant but actually be a positive covenant and vice versa. For example, a covenant “to use the property only as a residential dwelling” is, on first reading, a positive covenant to use a property a certain way. However, in practice it is actually a restrictive covenant not to use the property for any other purpose than a residential dwelling (a house).
The reason that it’s important to be able to identify what is a positive covenant and what is a negative/restrictive covenant is because not all covenants are always enforceable and the way these covenants pass with a property’s title varies, dependent on whether a covenant is positive or negative.
For a covenant to continue to be enforceable after the original parties have parted with the land involved, both the benefit and the burden must “run with the land”. The rules which dictate whether the benefit and burden run differ depending on whether the covenant is positive or negative. The tests applied to establish whether a covenant is enforceable are set in Equity and Common Law. For more details click here.
Furthermore, there are circumstances where a covenant might become outdated or otherwise unenforceable. In such circumstances under S84(1) of the Law of Property Act 1925, an application may be made to the Lands Chamber of the Upper Tribunal (formerly the Lands Tribunal) to remove or modify a covenant.
In certain cases, it is possible to take indemnity insurance against historic covenants where the underlying issue cannot be resolved.
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