Obtaining restrictive covenant insurance

[Jeremy Harris]

Thanks, @Ferdinand, that's useful as there are two areas in the section on enforceability in that document that would seem to apply here, the ones I've highlighted:

 

Quote

9. Successors in title may enforce the covenants, but will not be able to if:

 

(i) The covenant was expressly or in part for the personal benefit of the original covenantee.

 

(ii) The retained land is not capable of benefiting from the restrictive covenant.

 

(iii) The retained land cannot be identified either under the deed or from other intrinsic evidence: see Crest Nicholson Residential (South) Ltd v. McAllister [2004] EWCA Civ 410, [2004] 1 WLR 2409.

 

(iv) If the covenant is expressed to be for the benefit of retained land as a whole, and the successor in title only owns part of the retained land, then it would be unenforceable.

 

(v) The successor in title has acted in a way which will be inequitable to allow enforcement of the restrictive covenant, for example, by acquiescence.

 

[Jeremy Harris]

7 minutes ago, jack said:

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. 

 

 

Thanks, that's pretty much my take on it, and if our solicitor had taken the time to read the thing properly I'm damned certain that they should be advising me that it's unenforceable, not trying to sell me insurance (very expensive insurance - if I choose to buy insurance I can get it for less than 1/3rd of the total price I'd have to pay by using them).

[jack]

3 minutes ago, JSHarris said:

(iii) The retained land cannot be identified either under the deed or from other intrinsic evidence: see Crest Nicholson Residential (South) Ltd v. McAllister [2004] EWCA Civ 410, [2004] 1 WLR 2409.

 

Playing devil's advocate Jeremy, you've had no trouble identifying the land from intrinsic evidence, so it's the other clause that I'd be relying on!

[Ferdinand]

My general view is that covenants are so expensive actually to enforce (High Court?) that someone has to be really seriously narked or their property fundamentally damaged for them to do it.

 

But some are willing to risk 5 figures on a perceived affront.

Edited September 26, 2018 by Ferdinand

[newhome]

2 hours ago, Ferdinand said:

My general view is that covenants are so expensive actually to enforce (High Court?) that someone has to be really seriously narked or their property fundamentally damaged for them to do it.

 

But some are willing to risk 5 figures on a perc I’ve affront...

 

Agreed. My neighbour continued her quest to have Network Rail comply with the burden on the plots here and 5 different lawyers agreed on the interpretation. Network Rail say that they don’t agree with the interpretation and my neighbour has now been advised by her own solicitor that it would be unwise to take them on through the legal route due to the potential costs involved. Not before she spent well into 4 figures though! Cases are reported all the time where people almost bankrupt themselves arguing over a tiny strip of land or some such. Luckily common sense prevails for most and unless it has extremely serious consequences most people will yield. 

[Moira Niedzwiecka]

The whole idea of the indemnity insurance is to protect your buyers and their successors in title in case someone should try to enforce the covenant.

Whilst the covenant may not be able to be enforced it is still recorded & registered on the title.

It could incur the owners in legal costs defending the action.

It is possible to have covenants removed in some cases via The Lands Tribunal, but this is a very expensive & time consuming process.

How much is the indemnity policy?

[Jeremy Harris]

1 hour ago, jack said:

 

Playing devil's advocate Jeremy, you've had no trouble identifying the land from intrinsic evidence, so it's the other clause that I'd be relying on!

 

 

Good point, but the "intrinsic evidence" has to be stronger than just knowing who the vendor was in 1981 and knowing the extent of their land at that time, it seems.  In the case referred to this was the essence of the ruling at appeal:

 

Quote

Coram: Lord Justice Auld Lord Justice Chadwick And Lady Justice Arden

Ratio: Land had been purchased which was subject to a restrictive covenant. The papers did not disclose the precise extent of the dominant land, the land which benefitted from the restriction.

Held: The land having the benefit of a covenant had to be easily ascertainable. It would be oppressive to expect a purchaser of land to establish the facts himself. Those drafting such covenants should bear in mind the probable need for the covenant to be examined many years later. A restrictive covenant affecting land will not be enforceable in equity against a purchaser who acquires a legal estate for value without notice of the covenant. A restrictive covenant imposed in an instrument made after 1925 is registrable as a land charge. If the title is registered, protection is effected by entering notice of the restrictive covenant on the register. In this case the land no longer had the benefit of the covenant, it had not been annexed or assigned.

Jurisdiction: England and Wales

 

The sentences I've highlighted seems key, in that if the covenant is not properly registered as a land charge (and that is the case here - the land cannot be identified by the charge that remains on the registered title) then the covenant becomes, in effect, unenforceable.

 

It bugs me that our solicitor failed to pick this up when we bought the house, as nothing has changed in the intervening years (except the popularity of indemnity insurance!).

[Jeremy Harris]

Just now, Moira Niedzwiecka said:

The whole idea of the indemnity insurance is to protect your buyers and their successors in title in case someone should try to enforce the covenant.

Whilst the covenant may not be able to be enforced it is still recorded & registered on the title.

It could incur the owners in legal costs defending the action.

It is possible to have covenants removed in some cases via The Lands Tribunal, but this is a very expensive & time consuming process.

How much is the indemnity policy?

 

The indemnity policy price seems variable by a large amount!  I've found an online indemnity policy and had a quote for £125, including tax, which is around 1/3rd the price my solicitor is trying to charge (including a hefty fee from the solicitor for arranging the policy).

 

If push comes to shove I'll just buy the £125 insurance, but on a point of principle I'm not going to pay through the nose for it with my own solicitor, as I'm convinced it's primarily a money making scam.

 

As @Ferdinand wrote, enforcing covenants is so expensive that the likelihood of anyone trying to enforce this one, when other clauses in the covenant prevent the house being built taller, and so possibly causing a restriction of light, air etc to the bit of land involved, is effectively zero.  The other restrictions have been accepted by the purchaser, and they include clauses that prevent anything over a single storey, or a single dwelling house, being built on the land.

[Moira Niedzwiecka]

Enforcing the covenant is not the issue really.

All the party with the benefit needs to do is write to you informing you that they have the covenant & indemnity insurance will not then be possible.

They have the covenant, it is as simple as that. You would then have to take action to deal with it.

Don't forget the aspect of neighbourhood dispute as well.

£125 sounds about right for an indemnity to cover this.

In the scheme of things it is not much money to resolve an issue.

Your buyers solicitor would need to approve the wording of the policy.

[Moira Niedzwiecka]

http://www.landmarkchambers.co.uk/userfiles/documents/resources/Discharge_and_Modification_of_Restrictive_Covenants_under_s_84_-_Toby_Watkin.pdf

This is a really useful article.

[jack]

2 hours ago, JSHarris said:

Good point, but the "intrinsic evidence" has to be stronger than just knowing who the vendor was in 1981 and knowing the extent of their land at that time, it seems.  In the case referred to this was the essence of the ruling at appeal

...

The sentences I've highlighted seems key, in that if the covenant is not properly registered as a land charge (and that is the case here - the land cannot be identified by the charge that remains on the registered title) then the covenant becomes, in effect, unenforceable:

 

That definitely isn't what I take from the headnote you quoted. Perhaps the case as a whole says more.

 

I'm going to stop arguing now, as I think it's a bit of a moot point given that this part of the covenant clearly has no practical effect. My suspicion is that whoever drafted it just used standard language for such covenants, and didn't consider whether it could actually apply to this particular situation.

[Jeremy Harris]

4 hours ago, jack said:

My suspicion is that whoever drafted it just used standard language for such covenants, and didn't consider whether it could actually apply to this particular situation.

 

I'm certain you're right, it reads as if it is just a bit of boilerplate text  to me, and is a bit odd in that it doesn't really seem to add anything useful to the beneficiary over and above the clauses that restrict anything being built on the land other than one, single storey, dwelling; what's on there now almost fills the entire width of the plot in the looking from the direction of the original vendor's house.  There's no room for any extension on that axis, or at the rear, facing the original vendor's land, either, so the whole thing seems to be just a quirk that the purchaser will have to accept, I think.

 

It can't be insured against anyway, I've just been told, because when the issue of the restrictive covenant came up with the previous purchaser, the one that I believe wanted to develop the site into something other than a dwelling, I discussed the covenant with my neighbour, so they are fully aware of it.

[Temp]

On 24/09/2018 at 14:16, JSHarris said:

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?

 

 

 

 

I'm thinking that the land registry might have a way to remove a covenant that cannot be enforced. 

[Jeremy Harris]

2 minutes ago, Temp said:

 

 

I'm thinking that the land registry might have a way to remove a covenant that cannot be enforced. 

 

They should have, but the only process I can find to do this takes years and costs a lot of money.

[ProDave]

This is an interesting thread.

 

There is a new build near here (one I wired) that was a replacement for an old cottage.  It turns out the plot was a lot bigger than the original house site and previously the local farmer had sold some extra land with an uplift clause.

 

As soon as the new owner started rebuilding, it became aparant that his garage was being built on the bit with the uplift clause (the house was being built on the original site)  The farmer tried to claim his uplift, but the owner basically stuck 2 fingers up at him and said the clause is unenforeceable.  I don't know the details, but I wonder if it's the person being a beneficiary, not "land" 

[Ferdinand]

31 minutes ago, JSHarris said:

 

They should have, but the only process I can find to do this takes years and costs a lot of money.

 

Underneath all the verbiage and procedure that will come down to mutual agreement, and possibly a payment one way or t’other..

[Ferdinand]

On 17/09/2018 at 11:11, mike m said:

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

 

Another aspect which I put in a post which seems to have vanished up my iPad's posterior, was that one way of mitigating risk is via a household or directly arranged policy which covers legal expenses, since that draws at least one ("the legal action will cost you umpteen thousands") of the teeth from your opponent.

 

Though the corollary is that your insurance company will expect to run the legal action.

 

If the cost is small and were I in a position to do so, I would usually provide the indemnity policy.

 

In fact I am just about to buy one to cover potential value lost of a right to use a driveway which was developed from a pedestrian pathway in I suspect a JFDI manner, with a questionable right to access it with a car. The issue would be if someone blocks it. Probably needed to obtain the extra bit on the mortgage and for when it is sold eventually.

 

Ferdinand

 

Edited September 26, 2018 by Ferdinand

[Hecateh]

On 17/09/2018 at 11:11, mike m said:

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

 

I could have got indemnity for around £150 (unenforceable covenant about not building forward of current building line).  I didn't take it at this stage.  I then needed it in order to get the  loan I needed for my build.  The 'beneficiaries' who clearly don't know about the covenant (Or they would have approached from a different angle) put in a standard objection to the build (loss of view).  Because of this the premium was elevated to £450.   In my experience, preplanning would have been much cheaper.

 

[Jvh2012]

On 25/09/2018 at 11:56, Jeremy Harris said:

 

The indemnity policy price seems variable by a large amount!  I've found an online indemnity policy and had a quote for £125, including tax, which is around 1/3rd the price my solicitor is trying to charge (including a hefty fee from the solicitor for arranging the policy).

 

If push comes to shove I'll just buy the £125 insurance, but on a point of principle I'm not going to pay through the nose for it with my own solicitor, as I'm convinced it's primarily a money making scam.

 

As @Ferdinand wrote, enforcing covenants is so expensive that the likelihood of anyone trying to enforce this one, when other clauses in the covenant prevent the house being built taller, and so possibly causing a restriction of light, air etc to the bit of land involved, is effectively zero.  The other restrictions have been accepted by the purchaser, and they include clauses that prevent anything over a single storey, or a single dwelling house, being built on the land.

So sorry to jump on this so late just hoping that you may be able to tell me who you got the much cheaper quote from for the indemnity insurance please? Our solicitor is quoting us £870 for an indemnity policy! 

[Moonshine]

24 minutes ago, Jvh2012 said:

So sorry to jump on this so late just hoping that you may be able to tell me who you got the much cheaper quote from for the indemnity insurance please? Our solicitor is quoting us £870 for an indemnity policy! 

 

Going through solicitor is expensive, I can dig out who did ours tomorrow 

[Moonshine]

9 hours ago, Moonshine said:

 

Going through solicitor is expensive, I can dig out who did ours tomorrow 

 

@Jvh2012 trywww.lawsureinsurance.co.uk for a quote

[Jvh2012]

@Moonshine thank you