Partner Katja Wigham, in our Commercial Property team, explains restrictive covenants and the meaning of "retained land".
A restrictive covenant on the title to a property is effectively an agreement to refrain from doing something for the benefit of a neighbouring plot of land. Examples include restrictions on development and restrictions on use. In order to create a restrictive covenant there must be a “dominant land” and a “servient land”.
The general rule is that a restrictive covenant can be extinguished in the event that the two parcels of land come into common ownership in the future.
In a recent case of Jones and another v Owen and another [2017] EWHC 1647 (Ch), there were a number of complicated transfers of multiple plots of land that were transferred at separate times, ultimately to the same owner. One of the subsequent transfers was drafted on the basis that if a barn upon which, in-between the two plots, one of the plots were demolished at any point in the future, a certain strip of land was to be transferred back to the original owner. Further complications arose owing to the fact that there were two separate definitions of “Retained Land” in two separate transfer deeds. It was argued that the original restrictive covenants were extinguished owing to the fact that the strip of land in question had come in to common ownership. The Court made a declaration however that the definition of “Retained Land” included the strip of land in question, and awarded damages to the original owner of the land.
The Court however added that something had gone wrong with the drafting, and that the parties had intended that the land that was to be transferred back to the original owner in such circumstances. The Court held that the strip of land should be considered “Retained Land”, and therefore as having the benefit of the restrictive covenants referred to.
The High Court has therefore held that the meaning of “Retained Land” can potentially include land that was not at the time retained by the original owner. This means that in practice, a restrictive covenant burdening the land could be construed as also including land that might later be transferred back to the original owner and therefore enforceable. This case shows the importance of ensuring that the wording in a transfer deed will be carefully drafted in the context of restrictive covenants to ensure that any future dealing with the land operates in the manner that the parties expect.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
