Legal News | 28.04.25
Unlocking the fine print: what you need to know about covenants
When selling or purchasing a residential property, there are many legal intricacies that the parties need to consider. One aspect is the presence of covenants. Whether you are selling or buying a house in a new development or an older property, covenants can play a crucial role in determining how the home can be used and enjoyed. It is therefore important to understand what covenants are, how they can affect properties, and what you should know before signing on the dotted line.
What are covenants?
Covenants are obligations or restrictions attached to specific land or property. They can be set by developers, previous property owners, or even local authorities. Covenants can dictate how you can use, build on, or even maintain your property.
There are two main types of covenants that you may encounter affecting a residential property:
- Positive covenants: These require the property owner to do something, such as maintaining a fence, repairing a driveway, or paying for shared upkeep of a road or garden. Positive covenants do not run with the land, so they are not necessarily binding on future owners. However, most incoming owners agree to observe positive covenants within the transfer document that forms part of the purchase.
- Restrictive covenants: These prevent the property owner from doing something, such as building beyond a certain height, adding extensions, or running a business from the property. Restrictive covenants run with the land, which means they will remain relevant for both current and future owners.
Why do covenants matter?
Covenants can impact on your ability to enjoy your property. Understanding the covenants tied to the property you own, you’re selling, or you’re purchasing is critical for several reasons:
- Property use limitations
- If you plan to make significant changes to your property, such as adding an extension, converting a garage, or even starting a home-based business, restrictive covenants might prevent you from doing so or you may need covenant consent to do so. Knowing the specific terms of these covenants in advance will help avoid surprises later.
- Costs and financial implications
- Positive covenants often require financial commitments. If there’s a shared maintenance or repair cost for roads or fences, you may be obligated to contribute. Buyers should evaluate these obligations when considering the overall cost of owning the property.
- Resale value
- Restrictions imposed by covenants could also affect the future resale potential of your property. A highly restrictive covenant might deter some buyers who are looking for freedom to make changes. If you have already made changes to your sale property without adhering to the covenants, this could also be raised by a potential buyer who may request you seek retrospective covenant consent or that you provide indemnity insurance to help cover the risk.
- Legal action
- Failing to adhere to the terms of a covenant can result in legal action being taken against you. If you’re unaware of a covenant and make alterations that are prohibited, the party (or parties) that hold the benefit of the covenant (often neighbouring property owners or the original developer) could take enforcement action. Knowing and understanding the covenants that relate to your property can help you avoid such conflicts.
To find out more about how covenants affect your property, if you are looking for a conveyancer to handle your sale or purchase, please contact our Residential Property team at property@wansbroughs.com | 01380 733367.
