Most of us are aware of covenants on our houses.  There may be a covenant to repair a fence and a covenant not to use the house for business purposes.  Strangely the law deals with these in different ways.  A covenant not to use your house for business purposes is known as a negative covenant and is binding on whoever owns the house.  Positive covenants such as the one to repair a fence are not binding on any owners other than the first owner of the house. Without going into the complexities, lawyers have used various methods to try to ensure that positive covenants are binding on all subsequent owners of the house but either they are prone to potential failure or they are cumbersome and expensive.  Sometimes the Courts have helped, for example by saying that an obligation to pay to maintain the cost of a shared road is enforceable to the extent that if the owner does not pay they are not entitled to use the road.  This is known as the “benefit and burden principle”.  However the Courts have indicated that there are limits to the applicability of this principle.  We imagine that to most lay people this situation would seem to be quite bizarre.  Happily the Law Commission have some proposals for overcoming these problems. They suggest creating what will be known as Land Obligations which can be positive or negative and these will be enforceable.  Land Obligations will have to benefit adjoining land to be enforceable.  The Law Commission took the view that they did not want land to become overburdened so obligations which do not benefit adjoining land will have to be protected by the use of existing mechanisms.  An example is overage where a land owner covenants to pay certain percentage of the increase in value of the land should they obtain Planning Permission.  In such cases the current practice of requiring every future owner to enter into a direct covenant with the person who has the benefit of the overage will remain.  As overage clauses are increasingly common it is a pity that they will not be included in the Land Obligation proposals. Nevertheless the Law Commissions’ proposals are very welcome

It is hoped that a draft Law of Property Bill will be presented to Parliament in the near future to implement the Law Commissions proposals.

If you need advice regarding covenants or other property related matters please contact our Property Department 

 

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