Obtaining restrictive covenant insurance

[Moonshine]

I am trying to get my head around restrictive covenant insurance, and think this can only be obtained through a solicitor.

 

As i understand there is two options, get the insurance before submission to planning, or risk the planning and get it afterwards.The price of the premium is dependant on the risk, and pre planning would be more expensive

 

Can anyone provide any pointers on what the cost of the insurance and solicitor would be?

 

Thanks

[AliMcLeod]

Surely both are dependent on the complexity of the covenant, and the inherit risk (as you state)?

 

 Can you share what the restriction is and do you want it removed completely or mitigated to some extent?

 

Have you tried getting an initial 15-30 free chat with a solicitor?

Edited September 17, 2018 by AliMcLeod

[Ferdinand]

In theory Planning should not take a restrictive covenant as a Relevant matter.

 

That is a civil issue of which they should wash their hands.

 

Ferdinand

[Moonshine]

8 minutes ago, Ferdinand said:

In theory Planning should not take a restrictive covenant as a Relevant matter.

 

yep planning themselves shouldn't highlight it as its a legal issue, however as the planning is put out for consultation then the relevant party may get wind of it

[Moonshine]

14 minutes ago, AliMcLeod said:

Surely both are dependent on the complexity of the covenant, and the inherit risk (as you state)?

 

 Can you share what the restriction is and do you want it removed completely or mitigated to some extent?

 

Have you tried getting an initial 15-30 free chat with a solicitor?

 

I would want to mitigate the risk / cost, and was just interested in indicative costs if anyone had gone through a similar proces. 

 

The initial chat with a  solicitor is my next step.

[MikeSharp01]

Although I may have misunderstood I cannot see this being vastly costly as you do intend to stay within the confines of the restriction - don't you then the risk is one of interpretation, and if you are not then you won't get insurance cheaply as the risk is bound to crystalise . Under which circumstances I would fess up to the 'relevant party' so they are not surprised and negotiate change.

[Hecateh]

There was a restrictive covenant in place that stated i could not build forward of the current buildng line.  It was put in place in 1951, when the bungalow and the one next door were build on land sold by the next but on neighbour to me.  

 

I first used an online legal advice site who gave me the information that, because of how it was worded it was not enforceable so I decided not to worry about it.

 

I went for planning permission first, (ignoring the issue) I needed a bridging loan to finance the build and they picked up on it.  I was given a quote of just under £400 for indemnity insurance.  Then various questions were asked,  'Had these people objected to the build?'  They had - this told me that they had no idea about the covenant as their objection was about losing their view WHICH was, i believe, the objective of the covenant in the first place.  This however increased the premium to about £500.  

 

 

[Hecateh]

The insurance was sourced and put into place by the solicitors dealing with the bridging loan. I don't think I paid any extra to them for this but I could be wrong - I paid them a small forture so maybe I did

[Jeremy Harris]

Hopefully the OP won't mind me tagging on to this as it's the same topic. 

 

We're being asked to stump up for a single premium insurance (plus a hefty fee from our solicitor) to cover a covenant that can't ever be enforced, for two reasons.  Firstly, it's a "right to light" covenant where the property that has the right to light is not identified (for whatever reason the deeds/land registry documents don't identify the property).  Secondly, there are other covenant clauses that restrict the house to single storey, and as such it couldn't possibly block anyone's light, especially as it's got hedges on the two sides facing distant neighbours that are around 12 to 15ft tall.

 

My inclination is to say no, we won't pay for insurance, as it's not something that can ever be enforced.  I'm getting a bit fed up with our buyer trying to get us to jump through hoops, especially as we gave her the details of the covenant BEFORE she made an offer.

 

I'm inclined to the view that these one-off indemnity insurances are a bit of a scam.  Anyone got any views about them in a case like this?

 

 

[ProDave]

I share your view that they are a scam, but personally I would not just say no, however unlikely it may be, the buyer could walk away.  I would just stump up the fee which is probably small beer in the scheme of things.

 

Perhaps I am more cautious having had trouble selling before,  I would not want to do anything to alienate a procedable buyer.

[Moira Niedzwiecka]

 

20 years ago indemnity insurances were hardly ever heard of. Now they are on everything.

They can useful in cases of defective title.

You may also find that restrictive covenants are not always mentioned on the burdened property title but are mentioned on the title of the benefitting property.

If it doesn't cost much but facilitates the sale may be worth just providing it.

If your buyer is having a mortgage their solicitor may require it to include in the report on title to the mortgage lender.

 

[Jeremy Harris]

Our buyer is a cash buyer who doesn't need a mortgage and definitely doesn't want to develop the house, she's buying it for an ageing parent and was fully informed of the covenant when she viewed the house.   Having been caught out by the first sale falling through because the buyer pulled out when seeing the covenants I made sure I showed them to every person who viewed the second time around.

 

What hacks me off is that it's our solicitor pushing for the insurance, and the fat fee they get for providing it (more than half the premium!). 

 

I know that neither of the neighbours know anything about this, as neither has anything in their deeds or Land Registry documents that mention any covenant regarding our house.  Both have checked their deeds to be sure and have come back saying that they can't find anything at all referring to our house.  One of the houses is 60m away anyway, so is well outside the "right to light" provisions, and the other is much higher than our house and our house is completely hidden from it by a 15ft high yew hedge.

[ProDave]

5 minutes ago, JSHarris said:

What hacks me off is that it's our solicitor pushing for the insurance, and the fat fee they get for providing it (more than half the premium!). 

 

That's different.

 

Tell him, he should be looking after YOUR interests, not the buyers.

 

If your buyer has not yet got wind of this "offering" I would keep quiet and instruct your solicitor it is not necessary and importantly not to even mention it to the buyers solicitor.

 

When selling our old house down south, our buyer asked for indemnity insurance due to possible breaching a "no building without permission" covenant (which I think was worded so as not be unenforceable)  Because it was the buyer that had spotted the issue and wanted the policy, I was happy to pay for it to keep the deal going.

 

[jack]

9 minutes ago, JSHarris said:

What hacks me off is that it's our solicitor pushing for the insurance, and the fat fee they get for providing it (more than half the premium!). 

 

If it's your solicitor pushing for it, push back, for sure. I'd use the arguments above, and encourage him to forward them to the buyer.

 

If the buyer doesn't need a mortgage, then there's no third party compelling them to get this insurance. You're therefore effectively being asked to pay a premium for an optional, and probably valueless, insurance policy that would in any event only benefit the other party. They might as well ask you to pay their mortgage application fee, imo.

 

We have various covenants on our property from the early 50s. Stuff like no circuses or shooting galleries, no lived-in caravans, the requirement to maintain a hedge between points B and C on the plan (but there's no B or C shown on any version of the plan we've been able to find). We were told that the mortgage provider required us to pay for covenant insurance directed to covenant that said the original 1952 seller had to approve the appearance of any dwelling house built onsite. This clearly dated to the time when the surrounding land was subdivided (it was a farm and then a quarry), and the seller clearly couldn't suffer any damage from us technically breaching one interpretation of the language by knocking down the original dwelling and redeveloping the site 60 years later.

 

It was going to cost ~£800, from memory. It was mentioned once before the mortgage was finalised, but it somehow didn't get raised again until weeks after we'd moved in. I ignored the solicitor's reminder around that time, because as far as I was concerned, if it was a requirement of the mortgage, they shouldn't have given us the money without it.

 

In the end, we never heard about it again..

[Jeremy Harris]

Thanks, I'm going to push back on this, as I have a strong suspicion that it's our solicitor seeking to earn a fee from selling a pointless insurance policy, as I know the purchaser isn't bothered by the covenant at all - she has specifically told me this. 

 

I'm inclined to the view that these are primarily a scam, as they are effectively a zero-risk insurance policy if the covenant is unenforceable, as this one is.

[joe90]

Yup another way for solicitors to make money, we were TOLD to take out insurance on our last house as it’s near a church and they can demand money from houses built on land that used to belong to the church. After searching the internet i found the government were passing a bill to null this but it took me getting stroppy with the solicitors nd demanding that I would not take out insurance. 

[Hecateh]

I agree with the above; that it isn't necessary. However, if you do want to mitigate responsibility maybe look into obtaining independent indemnity.  Not expensive if it clearly isn't enforceable and everyone's mind is put at rest without lining your solicitor's pockets (in reward for him using scare tactics)

[Temp]

First thing to do is get the solicitor to confirm if the covenant is valid/enforceable. I understand they have to be written for the benefit of another piece of land yet many were written in favour of a person.

 

https://www.land-registry-documents.co.uk/news-blog/covenantswhat-you-need-to-know-about/

Edited September 24, 2018 by Temp

[ProDave]

7 hours ago, Temp said:

First thing to do is get the solicitor to confirm if the covenant is valid/enforceable. I understand they have to be written for the benefit of another piece of land yet many were written in favour of a person.

 

https://www.land-registry-documents.co.uk/news-blog/covenantswhat-you-need-to-know-about/

That link gives a 403 error

[jack]

5 minutes ago, ProDave said:

That link gives a 403 error

 

Not for me 

[Jeremy Harris]

Thanks all.  The wording of the part of the covenant that no longer defines the land to which it applies (the plan it refers to is missing, we don't have a copy, the Land Registry don't have a copy and the current owners of the house next door, which sold the land our house is on in 1981, don't have a copy) is:

 

Quote

"EXCEPT AND RESERVED unto the Vendors and their successors in title the full and unrestricted right at any time hereafter and from time to time to erect or permit to be erected any buildings or other erections and to alter any building or other erection on the Vendors adjoining land edged with green on the said Plan numbered One (hereinafter called "the green land") in such manner as to obstruct or interfere with the passage and access of light and air to any buildings which may be erected upon any part of the land hereby conveyed and so that all privileges of light and air now or hereafter to be enjoyed over any part of the green land by or in respect of the property hereby conveyed shall be deemed to be enjoyed by the licence or consent of the Vendors and not as of right AND FURTHER the Vendors reserve such rights of light and air for the benefit of the green land as they would be entitled to if the property hereby conveyed and the green land were in separate ownership and indefeasible rights of light and air as at present enjoyed in respect of the green land had been acquired under the Prescription Act 1832."

 

The vendors at that time were the owners of the house to the West, some ~40m away, and their beneficiaries in title are the current owners of that house.  The house to the South of our house was built around 1930 and has been in private ownership since it was built, so cannot be the land referred to in the above clause.  I know full well that the "land edged with green" can only be the 1981 vendor's land, as there is no other land adjoining our house that it could be (the local authority own the grass verge to the North, we own the grass verge to the East).  I've shaded in the area in yellow that is the only land to which the above clause could apply to on this plan:

 

 

From the link that @Temp gave, I note that in the section on enforceability there is this note:

 

Quote

2. There must be a benefited and a burdened land and the two must be “reasonably close together” – close enough for the benefited land to be genuinely adversely affected by a breach.

 

I find it very hard to see how a "right to light" could possibly apply given the distance between the 1981 vendors house to the West and our house.  I'm certain that it would fail the "reasonably close together" test.  AFAIK, the "right to light" cannot now be enforced for an area of garden, only a dwelling.

[Tyke2]

I think that right to light is a legally defined term for existing buildings. Specifically windows. So land in itself wouldn't have a right to light.

You need a right to light surveyor with experience in such matters and probably a lawyer. Don't try and second guess it now with "expert" advice from the likes of myself :-)

 

[Jeremy Harris]

9 minutes ago, Tyke2 said:

I think that right to light is a legally defined term for existing buildings. Specifically windows. So land in itself wouldn't have a right to light.

You need a right to light surveyor with experience in such matters and probably a lawyer. Don't try and second guess it now with "expert" advice from the likes of myself ?

 

 

That's my understanding from a previous debate we had, either here or on this forum's predecessor, where someone (almost certainly @Temp) found chapter and verse on the "right to light" legislation.  Either way, I can't see how a house ~40m away from our boundary could possibly have a "right to light" with regard to land so far away, especially as there's a very big hedge on our boundary, on their side.

[Ferdinand]

Somewhat extensive explanation on Restrictive Covenants by Gary Baker QC is at the link below.

 

http://www.pla.org.uk/images/uploads/library_documents/Gary_Blaker_notes.pdf

 

He calls it the "Briefest of Overviews" thusly:

 

"3. This is only the briefest of overviews of the law relating to restrictive covenants relating to freehold land. It is not in any way intended to provide all the answers, in some places there are more questions than answers."

 

Wordcounter.net says it is 13,925 words. Enjoy.

 

I applaud the distinguished Mr Baker for making his authoritative notes available, however...

 

 

☺️

 

Edited September 25, 2018 by Ferdinand

[jack]

1 hour ago, JSHarris said:

I find it very hard to see how a "right to light" could possibly apply given the distance between the 1981 vendors house to the West and our house.  I'm certain that it would fail the "reasonably close together" test.  AFAIK, the "right to light" cannot now be enforced for an area of garden, only a dwelling.

 

I think your arguments are generally sound, except that it's the benefited and burdened lands that need to be "reasonably close together", rather than the dwellings. I think it passes that test, but not all the others.

 

Also, having read your comments above, I misinterpreted the covenant when I initially skim-read it. For the sake of others that might make the same mistake, all of the stuff up until "AND FURTHER" is actually protecting the right of the vendor to build other buildings that interfere with the light and air enjoyed by Jeremy's property by way of the "green land".

 

The only rights that the green land enjoys are "such rights of light and air ... as they would be entitled to if the property hereby conveyed and the green land were in separate ownership and indefeasible rights of light and air as at present enjoyed in respect of the green land had been acquired under the Prescription Act 1832."

 

If I interpret this clause correctly, then all it's saying is that the green land enjoys a specific, limited right to light and air only to the extent that it would have existed had the properties previously been owned separately at the time Jeremy's land was conveyed, and even then only to the extent that such rights would have been acquired under the Prescription Act 1832. In other words, I don't think you should even look at the current right to light laws to interpret this part of the covenant. For example, I don't think that common law rights are covered by this clause, unless they're referenced in the Prescription Act 1832.

 

Since no dwelling on the green land appears to have had such benefit of light and air (although you might want to check out the "Prescription Act 1832" to be sure!) at the time of conveyance, I can't see that any such right can exist now. 

Edited September 25, 2018 by jack
Clarification of second last paragraph