Check out covenants before painting your home pink

AUCTION experts are urging property investors to research covenants in place on a property before making a bid.

Covenants dictate how a property can and can not be used and are registered at the Land Registry. Restrictive covenants are private agreements between land owners which may restrict the way land may be used and developed.

If the land or property is subject to a covenant, this will appear within the deeds of the property. Covenants are passed from one new owner to another.

In a recent case, the Jolly Anglers pub in Reading was sold with a restrictive covenant which meant its license was surrendered. The building was restricted from operating as a pub when it closed in June last year.

Auction Finance Limited reveals eight of the most unusual/strange covenants seen in auction houses in the past year:

• No unchained pets allowed
• Cars/caravans must not be parked at the property
• A satellite dish can not be put on the property
• The property can not be painted pink
• Rubbish bins must be hidden from street view
• Cars can only be repaired behind a screen
• Only one dog allowed per property
• You can not run a business without the permission of the developer

Chris Baguley, director at Auction Finance Limited, said:

“Covenants are imposed on the use of land or property by a former owner. Some of the restrictive covenants we see on properties are extremely unusual and make you wonder why they were put in place. However, even if they seem ridiculous, they are legally binding and must be followed. Many restrictive covenants have an expiry date so you may be able to secure a bargain at auction and then hold on to the property and carry out the renovations you want when the covenant expires.

“Similarly, if a covenant was put in place many years ago for a good reason, but this reason no longer exists, it may be possible to have the covenant removed or modified. Get all the facts about a property early on so that you can make an informed decision.”

Claire Egerton, property partner at law firm Lewis Hymanson Small, said:

“It’s important to check out any covenants on a property at the earliest stage. Many investors, who have gone ahead despite covenants, have been taken to court for breach. It may well be the case that you can modify the covenant but every case is different so check before you buy.

“Always ask your legal representative if you’re unsure what is in place. It may be possible for your solicitor to obtain an indemnity policy which will cover liability for the future breach of a covenant, so ask about this option”.