You bought your home, obtained a mortgage and completed the purchase. Years later, the buyer’s solicitor identifies a restrictive covenant breach. Your sale is now waiting for evidence of consent, an indemnity policy or another solution.
The extension, conservatory or other alteration may have been there when you bought. So why is it becoming a problem now?
There are two questions to separate: what needs to happen to get your sale moving, and what was identified and explained during your original purchase.
A restrictive covenant breach is holding up your sale or remortgage?
If the problem existed when you bought, it may be worth looking at the original advice and the lender requirements that applied at the time. You do not need to know whether anyone was at fault before starting a conversation.
What is a restrictive covenant breach?
A restrictive covenant limits what can be done with land. Depending on its wording, it might prohibit particular building works, restrict the use of the property or require consent before an alteration is made.
A possible breach can arise where something prohibited has been done, or where required consent was not obtained. Examples include an extension, conservatory, outbuilding or a front garden converted into parking.
However, the presence of a covenant does not itself establish a breach. Your conveyancer needs to identify the relevant wording, what has happened at the property and whether the covenant binds and can be enforced.
Why can a covenant breach emerge when you sell?
A buyer’s conveyancer reviews the title documents, the seller’s replies and the information available about the property. An alteration may prompt an enquiry asking for consent under a covenant in an earlier transfer or conveyance.
Sometimes consent was given but the paperwork cannot be found. Sometimes the issue was addressed through insurance during an earlier purchase. In other cases, the possible breach was never investigated or was left to be resolved later.
The buyer’s mortgage lender may also require particular enquiries, evidence or protection. Completing your own purchase with a mortgage does not establish that every subsequent lender will accept the same position.
A seller’s experience: issues raised after a purchase in 2020
In a public discussion about an English property sale, a homeowner reported that the buyer’s solicitors had identified two restrictive covenant breaches. The homeowner said they had bought the freehold property in 2020 and that these issues had not been highlighted during that purchase.
According to the account, the current conveyancer recommended indemnity insurance. The homeowner’s question was whether the original conveyancing firm should bear the cost.
This is an unverified personal account, not a finding of negligence. It nevertheless illustrates a practical question faced by sellers: if the problem was already present when they bought, what did the original conveyancing file reveal and what advice did they receive?
Planning permission does not settle the covenant question
Planning permission and restrictive covenants operate separately. Permission from the planning authority does not override a private restrictive covenant.
An extension can therefore have planning permission while still raising a question about consent under the title deeds. Building regulations approval is also a separate matter.
The government’s guidance on restrictive covenants explains the distinction between planning permission and private restrictions affecting land.
Will indemnity insurance resolve the problem?
Restrictive covenant indemnity insurance may be one possible way to address the transaction risk. Whether it is suitable depends on the circumstances, the policy wording and the buyer’s lender requirements.
A policy does not remove the covenant, grant retrospective consent or determine whether someone can enforce it. Check any existing policy rather than assuming it covers the current sale, property value or proposed future works.
Take advice before approaching anyone who may have the benefit of the covenant. Contacting them or requesting retrospective consent can affect whether insurance remains available.
Other possible routes include locating existing consent or agreeing a release or variation with the appropriate parties. A formal application to modify or discharge a covenant may sometimes be available, but it requires specialist assessment.
Our article on why a deed of variation may be needed when selling a property explains why the precise clause and proposed amendment matter.
What should you check from your original purchase?
If the alteration or use was already present when you bought, the starting point is the information available at that time. Title documents describe the covenant, but do not ordinarily establish the physical condition or use of the property.
Useful records may include:
- The title register and the deed containing the covenant.
- The seller’s replies and enquiries about alterations or consent.
- Your survey, valuation and relevant correspondence.
- The Report on Title and advice about the restriction.
- Any consent, release, variation or indemnity policy.
- The mortgage offer and lender instructions applicable to the purchase.
If you carried out the work after buying, the enquiry is different: what were you told about the covenant and any need to obtain consent before making alterations?
Was the restriction explained, or simply reproduced?
A report may reproduce a covenant without making its practical significance clear to the buyer. The relevant question is what advice was appropriate in the circumstances and what was actually communicated.
Were you told that a particular alteration raised a concern? Was the absence of consent investigated? If insurance was obtained, were its purpose and limitations explained?
Our article, The Client Signed the Report on Title. But Did They Understand It?, considers the distinction between receiving paperwork and understanding a property risk.
What did your mortgage lender require when you bought?
Today’s lender instructions cannot establish what applied to an earlier purchase. The lender, transaction date and applicable instruction framework all matter.
The Lexsure archive of historical lender requirements for restrictive covenant breaches can help establish the recorded lender-specific wording for a relevant date, where coverage is available.
Those records must be considered alongside the applicable general instructions, mortgage offer, any case-specific correspondence and the conveyancing file. An absence of express lender-specific wording does not establish acceptance of the breach.
The historical record can help answer what the lender required. It does not, by itself, establish whether the conveyancer was negligent or whether you have a claim.
Get the current problem identified and preserve the earlier records
Ask your current conveyancer to identify the exact covenant, the alleged breach, the missing evidence and what the buyer or lender requires to proceed.
Keep that explanation alongside the documents from your original purchase. It will help distinguish a newly created problem from an existing issue that has only now come to light.
Would knowing about the breach have changed your decision to buy?
If you are now questioning the advice you received, tell When I Bought when you purchased, what has been raised and how it is affecting your sale or remortgage. Start with a conversation about what happened.
This article concerns freehold restrictive covenants in England and Wales. The position depends on the wording, facts and applicable lender requirements.