Dealing with development hurdles

Restrictive covenants – these are restrictions on the development or use of land, enforceable by one landowner against another. With agricultural land, for example, it is not uncommon to find restrictions that prevent building work being carried out, or any uses other than farming.

Subject to various rules, covenants will be passed on so that they apply to, and are enforceable by, later owners of the land.

If the covenant is binding, the courts can enforce it by granting an injunction prohibiting the intended development, or award compensation to the person with the benefit of the covenant.

If the covenant is a recent one – say within the past ten-15 years – buying out the person with the benefit will probably be the only option to overcome it.

If the covenant is older there may be other options, such as taking out indemnity insurance. Such policies are becoming increasingly common, with the insurer agreeing to compensate the insured against losses suffered arising from the covenant, such as the cost of buying out someone with the benefit.

However, these policies can quickly become outdated as property prices rise. Insurers are also much less likely to take on a site if the person with the benefit of the covenant can be identified and has already been approached for a release.

Another option is to apply to the Land Tribunal for the covenant to be modified or released. This can be a costly and time-consuming procedure but where it can be argued that the covenant unfairly restricts the use of the land, the Lands Tribunal may lift or modify the covenant subject to compensation being paid.

Easements – aneasement is an agreement that confers on a person the right to use someone else’s property in some way. While an easement grants rights, it also has the effect of restricting an owner’s use of those parts of his land that are affected.

A developer may also need to use part of someone else’s land to complete a development, for example to gain access or to put in services.

There are many more pitfalls out there for the unwary, but with the right legal advice solutions can usually be found.