Covenants and Easements Explained for Developers

Covenants and easements can cause significant problems for developers if not properly understood and dealt with. Not only could they frustrate the designing of building schemes, but they may also cause significant delays, or even kibosh the development completely.

It’s quite common for developers to be caught off guard by easements and covenants, only finding out about their existence when they start disrupting plans. So how can you stop this from happening to you? The answer lies in seeking proactive legal advice at your earliest possible opportunity and giving yourself peace of mind that everything has been properly taken care of. 

Read on for the guide on how covenants and easements can affect developers, how you should approach them, and how the Thursfields team can help.

Selling Land for Development - land plans

What is the Difference Between Easements and Covenants?

Easements and covenants are attached to the title of a piece of land. While an easement grants access or permission to use the land for a specific purpose, covenants place certain restrictions or impose obligations upon it — usually for the benefit of other landowners or the local community. 

Both covenants and easements are documented with the Land Registry, and outline exactly what will be expected of you if you choose to develop on the land. They’re legally binding and can sometimes be difficult to navigate, which is why working with specialist residential property solicitors is always recommended. In this field, mistakes can be costly.

Common Types of Easements and Covenants

As a property developer, you are likely to come across several types of easements and covenants over the course of your career. These include:

Types of Easements

Easements are rather like elephants; easy to recognise but harder to define.  We can easily identify rights which are commonly accepted as being easements (for example rights of way and rights of light), but the label “easement” covers such a wide range of interests it may be difficult to discern any similarity between them. It is for this reason that legal advice should be sought to help understand the existence of easements and how they affect or benefit land.

Easements generally tend to be :

  • Public Utility Easements: Grant utility companies (gas, water, electric etc.) access to the land or the right to change any infrastructure which sits upon it. 
  • Private Easements: Enable another party (usually another landowner) to access your property (be it a right of way or right of entry), draw water from your land, or place sewage run off pipes through your land. There may also be other rights such as rights of light, storage or air or a right of support for buildings or adjoining land.

Easements are created expressly (generally by a deed or other legal agreement) or by implication. Express easements are generally easier to spot as the easement will be documented and a copy of the document will be generally available from the Land Registry.  

Implied easement are harder to spot as they can arise out of a variety of circumstances including necessity or by long use:

  • Easement by Necessity: Provide other landowners access to your property due to an overlying necessity. An example of this is if a neighbour cannot access a public highway from their land without encroaching onto yours. 
  • Easement by Prescription: The acquisition of an easement (such as a right of way  due to people using the land for a prolonged period of time). For this to come into effect, an individual must have had unfettered access to the land for a period of 20 years or more as of right, without the consent of the landowner and without payment. 

Types of Covenants

There are two main types of covenants that developers will come across, which are:

  • Positive Covenants: Usually obligate or require landowners to do something or perform certain activities or contribute financially to something on the land. 
  • Restrictive Covenants: These put limits on what landowners can do on their property. A common issue for developers could be a restrictive covenant that prevents the building of any structures on the land or use the land for something other than an authorised purpose.  

Understanding Easements for Developers

Before significant funds are committed to a project, it is important to have a clear understanding of what (if any) easements exist on the land. Given that they are sometimes not easy to spot, it’s recommended to seek guidance from a specialist, so you don’t get caught off guard. 

An easement involves having a right exercised over one piece of land (the servient land) for the benefit of another piece of land (the dominant land). 

As a developer you need to be sure that you have all the easements you need to enable you to carry out your proposed development of the land you have acquired. You also should be aware of easements which neighbouring landowners have over your land which could affect your ability to develop the land you have acquired.

As a developer, you can be on either side of this equation, depending on whether you’re having to deal with an existing easement or are trying to set up a new one. 

Here are a few common issues developers may face when dealing with easements: 

Creating New Easements

If a proposed development site does not benefit from any existing easements, it may be possible to request a new one in order to provide services or access to the land. Thorough due diligence is required before applying for a new easement, as there could be extenuating circumstances that prevent it from being granted, there may also be a cost element with the landowner wanting money in return for the granting of an easement. 

Examples of these include:

  • Existing Rights and Covenants: If there are existing rights and covenants in place on the servient land, they could be in conflict with the proposed easement. 
  • Restrictions on the Land Title: There may be cases where the servient land is subjected to certain title restrictions (such as an overage) or the land may be subject to a loan or a mortgage. In these situations, consent with parties who have an interest in the land (such as banks) will need to be granted before the easement can be created. 
  • Common Land: Areas categorised as “common land” may grant access to the general public to carry out activities such as grazing of animals. The landowner of “common land” (which can be a Council) can grant rights or easements over it and sometimes this will necessitate an application to the Secretary of State in certain circumstances — which can have a major knock-on effect on plans in terms of costs and delays. 
  • Mining & Mineral Rights: It’s possible that ownership of mines and minerals under land are excluded or the right to extract the mines or minerals are expressly or impliedly reserved out of the land in favour of a third party owner (which could be the Coal Authority or Church Commissioners). If this is the case, developers could find themselves accused of trespass if they start digging on this land. Depending on the age of the entry the issue can be addressed by taking out a mines and minerals indemnity policy. 

Excessive Use of Existing Easements

Although it’s possible for developers to take advantage of existing easements, you should be aware of its overall scope and ensure you don’t overstep the mark. If there is a dispute over what the easement allows, you could find yourself sued for damages or face an injunction stopping you from continuing with your intentions if you’re in the wrong. At the very least such action will delay and frustrate your plans and put you to considerable expense whilst they are being resolved.

Disputes over the scope of an easement is common in the agricultural sector when it comes to change of land use. It is therefore essential to seek specialist legal advice from the outset to ensure your plans don’t get derailed. 

Interference with an Easement

Interference can arise in a variety of ways. For land which has the benefit of an easement, if a developer uses land which breaks the terms under which the easement was granted, or uses the land excessively, takes actions contrary to the permissions granted by an easement, they could be accused of interference. 

If the land being developed is subject to an easement and a developer uses the land which impinges on the use of that easement by a neighbouring landowner, they could be accused of interference.

There are several enforcements that you may face if you do overstep the mark, including:

  • Injunctions: Injunctive relief is two fold. An injunction can be granted to stop you from doing something or to require you to do something. It all depends on the type of easement and how this affects the land. Injunctions can be extremely serious for developers, as they could seriously delay progress, or even result in the development being blocked altogether. 
  • Damages: The affected landowner can sue for damages if they have suffered a financial loss due to interference with an easement. 
  • Declarations: The affected landowners could ask a court to decide the scope of an easement, and whether the proposed development will result in interference. Developers can also seek a “negative declaration”, which asks the court to rule that the project does not constitute an interference.  

How Restrictive Covenants can Impact Developers 

Land development - man on site (close up)

All covenants can prove to be a headache for developers.  Restrictive covenants in particular have the capability to severely limit the type of construction that can take place on a piece of land. 

It’s quite common for developers to think that the simple granting of planning permission by a local council is all that’s required before kicking off a project, only to be surprised by the existence of a covenant further down the line. 

Although the presence of a restrictive covenant may not necessarily prevent the project from going ahead, it could cause delays, financial loss, or mean that substantial changes to the development are needed before things can progress. In some cases, you may need to go to court and apply for the restrictive covenants to be removed which is a time consuming and expensive process 

You’ll normally find restrictive covenants recorded in the title deeds of your land. In registered land the covenants are usually found in the Charges Register of the title register and are commonly called “encumbrances”. 

In unregistered land restrictive covenants are found in the unregistered title deeds called ‘Conveyances’ or ‘Indentures’.  A specialist residential property firm will be able to tell you more about the covenants which appear in those documents, so it’s important to seek advice as soon as possible. 

Considerations for Developers When Dealing with Covenants 

To avoid the possibility of a restrictive covenant significantly derailing your project, there are a number of potential actions you can take. Once it’s been confirmed that one exists, you should first find out exactly what it restricts, if it’s enforceable, and who the beneficiary is. 

You should also prepare a thorough strategy that covers several different elements, including:

  • Does the covenant affect your proposal for the development of the land and if so does the person with the benefit of the covenant exist?
  • Is the covenant enforceable?  Not all covenants are created correctly and may in fact be void;
  • Can an agreement be reached with the beneficiary of the covenant for the removal or variation of the covenant and if so what is the likely cost?
  • How likely it will be to get the courts to modify or discharge the covenant and how long will it take and what will be the cost?
  • Will the purchase of indemnity insurance cover you if a covenant is enforced and what would be the cost?

A specialist residential development team should be able to guide you through all of this before you commit too much time and money to the project. 

Challenging Restrictive Covenants

If the existence of a restrictive covenant has been proven, and will have an effect on your proposed development, you should first of all find out whether the covenant is valid and enforceable. 

The enforceability of covenants is a complicated area of law. There is a lot of case law and the validity of a covenant will need to be assessed on a case by case basis.  

Restrictive covenants may not be valid and enforceable if:

  • It is not negative in its content
  • It’s too ambiguous to clearly understand the parameters
  • The land is too far away from the beneficiary’s land, known as the “touch and concern” principle
  • Is void for want of registration as a land charge

Should the covenant appear to be valid and enforceable, your legal adviser will be able to assist in a number of different ways, such as:

  • Obtaining a Release or Variation: Achieved after negotiations with the beneficiary, it must be embodied within an appropriately-drafted deed, which, in effect, will remove the covenant entirely or vary it sufficiently to allow the development to proceed.
  • Declaring the Covenant Invalid: Applying to the courts and asking them to remove the covenant. This is usually done if there is some ambiguity whether the restriction is valid or enforceable.
  • Applying to the Lands Tribunal: A specialist court set up to deal with land development issues, the Lands Tribunal may discharge a restrictive covenant, or modify it to the point where the project can begin. 

Indemnity Insurance

Another potential avenue to explore is taking out an indemnity insurance policy. This is an option in cases where it’s impossible to identify the beneficiary, or it’s unlikely that an agreement with the beneficiary to remove the restriction can be reached. 

It is important to remember that indemnity insurance does not remove the covenant or prevent legal action from the beneficiary for any perceived breach. It merely provides a financial fund to assist in resisting any action or paying compensation awarded.

The cost of a policy will vary depending on the proposed use of the land, the nature of the covenant, whether planning permission has been granted and if so whether the planning application was objected to or not and how likely it is to be enforced, and the estimated gross value of the land after development. An insurer is likely to refuse an application if you’ve already attempted to contact the beneficiary of the covenant, so it’s important to seek legal advice to determine which is the best course of action for you. 

Why The Right Representation is Crucial for Covenants and Easements 

Covenants and easements can have a huge impact on developers, so it’s essential to work with a law firm with in-depth experience in the industry. They are able to identify whether these issues exist and assess the potential impact on your plans, so you can make an informed decision about whether to proceed.
If you do wish to continue and dispute a covenant or easement, the right law firm will guide you through the entire process and develop a bespoke strategy that’s designed to deliver your desired results. When there’s so much at stake, why leave anything to chance?

Expert Support for Easements and Covenants

If you’re a developer dealing with covenants and easements, you can rely on Thursfields to provide a first-class service. Members of our team have had considerable experience working within one of the largest national housebuilders in the industry, so you can be confident we know the industry inside and out. 

As a law firm that’s built around you, we’ll take the time to understand your unique circumstances and create a tailored strategy to achieve your goals. We’re proactive, thorough, and will work tirelessly to obtain the right result. 
The Thursfields team aims to take all the hassle out of development, so you can concentrate on what you do best, safe in the knowledge that all the legal aspects will be in the hands of experts. To find out more about how we can help, get in touch today.

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