Potential development sites are often blighted by restrictive covenants limiting the scale or type of development. Developers will therefore welcome the outcome of the recent case of HAE Developments Ltd v Croft Ealing Ltd and others [2022] UKUT 120 (LC), where the Upper Tribunal found in favour of a developer following their application for the discharge of various restrictive covenants. Contact Our Property Litigation Solicitors Section 84 of the Law of Property Act 1925 provides that a restrictive covenant can be discharged or modified in various circumstances, for example: The Tribunal will often consider the development plan and planning permissions granted in the area and will award compensation to the entity with the benefit of the covenant if they suffer loss as a result of an
order to discharge or modify the covenant or if the market value of the property is adversely affected by such an order. The developer, in this case, had applied for and obtained planning permission for the demolition
of a two-storey property and the construction of a three-storey property housing eight flats. The development site was subject to the following restrictive covenants: The covenants benefitted the adjacent property, known as The Croft. The Croft was originally a Victorian House with a large garden, but the original property had been converted into 11 flats and 22 maisonettes within four three-storey blocks. The proposed development would breach the restrictive covenants outlined above, and the developer, therefore, applied to the Tribunal for a discharge/modification of the covenants under s.84 of the LPA 1925. The freeholder of The Croft objected to the developer’s application. Contact Our Property Litigation Solicitors Case outcomeThe Tribunal found in favour of the developer. The main reasons for the Tribunal’s decisions were as follows:
In summary, the Tribunal discharged the first two restrictive covenants and found that the third did not need to be discharged as the proposed construction work would not result in a breach of that covenant. However, the developer’s request that the Tribunal make an order that the other side pays their costs was refused on the basis that it was not unreasonable for the freeholder of The Croft to object to the application. Take away pointsThe Tribunal’s decision is positive for developers. However, developers should be wary for several reasons, including:
Therefore developers should:
What were restrictive covenants quizlet?Racially restrictive covenants were not only mutual agreements between property owners in a neighborhood not to sell to certain people, but were also agreements enforced through the cooperation of real estate boards and neighborhood associations.
What is the main purpose of restrictive covenants quizlet?- Restrictive covenants (covenants in restraint of trade). -Terms that restrict the movement of employees post employment and the employer has a concern that the employee may take information to a competitor so put restrictive terms on the contract to try and prohibit this.
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