A restrictive covenant is a clause in a contract where you agree to engage in or refrain from a specific action.
In property terms a restrictive covenant is put into a piece of land to restrict the use, for example; to disallow buildings on a particular part of the land, stop you from running a business on the land or even from keeping chickens – although you need to check the wording carefully because you could argue they are pets!
Basically it says what can and can not and what must and must not be done on the land which is affected by the covenant.
Covenants are imposed by the land owner when the land is sold and sometimes can actually be positive covenants rather than restrictive ones. For example; to ensure that a wall is maintained or the garden is properly cared for or that the property is only used for dwelling purposes rather than business.
Breaching a restrictive covenant can be very costly, so you need to know if your property has any and if it does, ensure that you are protected from any consequences.
This is useful if you have some sort of restrictive covenant on your property.
One of the most common types of covenants is restricted use of your property, if the change has been going on for a considerable amount of time without any complaints they would be eligible for restrictive covenant insurance. However, in the event the covenants are unusual in any way then bespoke indemnity policies will be required, which can impact the premiums for such indemnity policies.
In some circumstances the property might have a title saying that there is a covenant in place but the paperwork may be lost or the person who put the restrictive covenant in place can not be traced.
The Land Registry states that indemnity insurance provides cover against loss sustained by the insured as a result of a legal risk. In the case of a breach of covenant, this means the insured would be compensated against loss, such as loss of value to his property, the costs of remedial works or the cost of legal action, should the beneficiary attempt to enforce the covenant.