Buying Development Land? Watch Out for Restrictive Covenants!

In a case which served as a salutary warning to property developers, a company’s plans for a prime plot of urban land were hamstrung by restrictions on the use of the site which had been in place for almost 60 years.

The original owner of the estate of which the land formed a part (the vendor) had stipulated in a 1956 conveyance that the site could only be used as a sports ground or for the erection of detached private residences. The restrictive covenant also required that any development plans had to be approved by the vendor.

Following the vendor’s death, the executors of his estate entered into a deed with the company by which they purported to release it from the development restrictions and to discharge the covenant. However, that move prompted objections from two local residents and the freehold owner of roadways which cross the estate.

In upholding the objectors’ arguments, the Upper Tribunal (UT) found that, on a true construction of the 1956 conveyance, the executors had not stepped into the shoes of the vendor and had no power to release the restrictions. Had the parties to the conveyance intended to extend that power to the executors, they could have said so.