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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Restrictive Covenants

Nick Wood, an Associate at the law firm Fladgate, comments

Developers can find restrictive covenants on the title of land they would like to develop. These covenants restrict the ways land can be developed or used. They can be frustrating, particularly where they appear irrelevant and historic. This article addresses what you can do when you find restrictive covenants on your development land.

1. Obtain planning permission
You can apply for planning permission even if you have not yet acquired the land. By applying for planning permission prior to acquiring a site you may discern at an early stage whether any objections are likely. A beneficiary will more than likely want to state any interest they have in a restrictive covenant at this stage. An added benefit, should the beneficiary fail to object, is that your chances of getting the restrictive covenants insured, released or modified will improve.

2. Obtain insurance
The most common solution to deal with a restrictive covenant is to obtain insurance against the risk of it being enforced. Insurers will almost certainly require you to have planning permission for your development before they will insure this risk for you, so it is a good idea to take the previous step in any event. The premium should be a one-off payment for an indefinite period and for the benefit of future owners, occupiers and mortgagees. The risk and premium with any insurance are closely linked. For historic restrictive covenants where no beneficiary can be identified, the risk (and premium), are likely to be low.

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