Required reading: How to work with restrictive covenants

Publication: Prime Resi

Although you might think your hands are tied, there are a number of ways to deal with the existing private agreements that may be hanging over a site, says SA Law partner Glenda Ferneyhough…

When buying a prime area of land you may feel like you’ve dotted all I’s and crossed all the T’s but the final obstacle to making proper use of a site could be restrictive covenants. A restrictive covenant is a private agreement between landowners specifying how the land can be used and managed, Although you might consider your hands to be tied, there are a number of ways to work with covenants.

Take for example a scenario we at SA Law considered at an event at the Institute of Directors in October.

A firm identifies a site and believes that it has potential to develop as a six storey block of luxury flats with a small arcade of shops and restaurants at street level below.

However, Land Registry Official Copies of the title to the site reveal that there is a restrictive covenant in favour of the Church Commissioners from the 1930′s declaring that “no noxious or noisome trade or business is to be carried on at the property and nor shall there be any intoxicating liquor sold.”

This is particularly problematic as one of the proposed uses of the units on the ground floor of the development…

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