Removing Or Relaxing Restrictive Covenants On Land

• Published date: 07 July 2021
• Subject Matter: Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
• Law Firm: Walker Morris
• Author: Mr Martin McKeague and David Manda

Developers will be all too aware that restrictive covenants can prevent land being used for a particular purpose. Restrictive covenants can limit the use of land; prohibit particular businesses, undesirable activities or potential nuisances; or restrict the height, type and/or density of buildings that can be erected on land. In some cases restrictive covenants may even prevent development altogether. Often restrictions will be historic, yet their existence can have a significant impact upon the development potential, and therefore on the marketability and value, of land.

In this briefing, Walker Morris' Real Estate Litigation experts Martin McKeague and David Manda provide an up-to-date overview of the legal and practical options for overcoming restrictive covenant-related impediments to development.

Options for removing or relaxing covenants

Any party wishing to vary or relax a restrictive covenant has a number of options:

• Negotiate with the beneficiaries of the covenant for an express release or variation. This is often the most commercially expedient option, but will only be effective where the full extent of the benefitting land can be ascertained; where all owners of the benefitting land can be identified and located; and where the parties can agree the release/modification, usually in return for the payment of a premium.
• Proceed with development in breach, probably having taken out an indemnity insurance policy against the risk of a beneficiary seeking to enforce the restrictive covenant[s]. In some cases perhaps where extensive enquiries as to the existence and whereabouts of beneficiaries have been conducted and proved unsuccessful, this might be a feasible option. Developers should be aware, however, that the usual remedy for breach of a restrictive covenant is an injunction. That can involve demolition of the development, and a significant costs bill.
• Apply to the Upper Tribunal (Lands Chamber) (UT) for the modification or discharge of a restrictive covenant. For more information on this option, see below; or
• Obtain a court declaration as to the nature, extent or enforceability (or not) of the restrictive covenant. (A favourable court declaration can by highly persuasive, and can therefore assist greatly, if obtained as a pre-cursor to any commercial negotiations or subsequent UT application.)

Grounds for removal/relaxation

The Law of Property Act 1925 (LPA 1925) affords the UT discretionary jurisdiction to modify or discharge restrictive covenants affecting land if one or more of the grounds in section 84 LPA 1925 applies, namely:

• the covenant is obsolete;
• it impedes some...