What is a Breach of Covenant? Understanding Legal Obligations in Property Agreements

When dealing with matters of property ownership and tenancies, understanding the legal obligations between parties is of vital importance. This is especially critical when it comes to breaches of covenant, a term that signifies the failure to adhere to specific promises or agreements outlined in property deeds or contracts.

These covenants are included in legal documents and serve as binding commitments between parties, such as landlords and tenants, or neighbouring property owners. When breached, these covenants can lead to significant legal disputes and financial repercussions. As a tenant or property owner, being aware of what constitutes a breach of covenant is essential to maintain good relations and avoid potential litigation.

In this guide, the property litigation experts at JMW will explain everything you need to know about breaches of covenant, helping you to approach these potentially challenging circumstances with confidence.

What Does Breach of Covenant Mean?

A breach of covenant occurs when one party fails to adhere to the terms agreed upon in a covenant. Covenants are legally binding promises written into property deeds or contracts, typically between a landlord and a tenant or between property owners. Breaching these covenants can lead to legal disputes and financial consequences.

Below are examples of scenarios that constitute a breach of covenant:

●      A tenant neglects to keep the property in good repair, where a lease requires the tenant to do so.

●      A property owner builds an extension without obtaining the necessary permissions, where there is a restrictive covenant requiring permission from specified parties.

●      A tenant consistently falls into rent arrears, breaching the fundamental rent covenants in the lease.

●      Residential property is used for commercial purposes without permission of a named party, whereby there is a covenant requiring permission for the same.

●      A resident engages in activities that cause a disturbance to neighbours, violating a covenant designed to maintain the area's tranquillity.

●      Property is rented to more tenants than is allowed by a covenant, leading to potential safety and legal issues.

●      Property is used in a manner explicitly forbidden by a covenant, such as using a garage for commercial storage when it is designated for residential use only.

Understanding these common scenarios can help landlords, tenants and property owners recognise potential breaches and take proactive steps to prevent disputes.

What Is a Positive Covenant?

Positive covenants are agreements that require the property owner or tenant to perform a specific action or engage in a particular activity. These covenants are proactive in nature, obligating the party to undertake certain tasks or maintain certain standards.

Examples of positive covenants include:

●      Repair: a requirement for the property owner to maintain and repair certain parts of the property, such as the roof or exterior walls.

●      Maintenance contributions: an obligation for the property owner to contribute to the maintenance of shared amenities, such as a communal garden or private road.

●      Insurance: a requirement for the property owner to insure the property against specific risks.

●      Mandates: a mandate for the property owner to construct certain structures or improvements within a specified time frame.

●      Rent: the requirement for the tenant to pay rent on time at agreed-upon intervals.

What Is a Restrictive Covenant?

Restrictive covenants or negative covenants are a specific type of agreement embedded in property deeds or contracts that impose limitations on the use of the land or property. These covenants are legally binding and are often designed to preserve the character, aesthetic and value of the property or surrounding area. Restrictive covenants can significantly impact what property owners can and cannot do with their property, and understanding them is important for property owners, landlords and tenants to ensure compliance and avoid potential legal disputes.

Restrictive covenants can cover a wide range of limitations. Some of the most common examples include:

• Building extensions: restrictions that prevent property owners from adding extensions or additional structures to their land or property without prior approval of a specified party.
• Use of property: limitations on the types of activities that can be conducted on the premises, such as a restriction on running a business from a residential property.
• Alterations and modifications: prohibitions against making certain changes to the property’s exterior or interior without consent, e.g. of the landlord.
• Architectural styles: requirements to maintain specific architectural styles or materials to ensure aesthetic consistency.
• Landscaping and fencing: restrictions on the types of plants, trees or fencing that can be installed.
• Noise and nuisance: limitations designed to prevent activities that could cause excessive noise or nuisance to neighbours.
• Vehicle parking: restrictions on where vehicles can be parked, often prohibiting parking on lawns or in front of the property.

How Do I Find Out What Covenants Are on My Property?

Examine the title deeds:

• The property title deeds are the official documents that record the ownership and details of the property.
• These deeds typically contain comprehensive information about any restrictive covenants that apply to the property.
• Review the title deeds carefully to identify any specific restrictions or obligations that you, as the property owner or tenant, must adhere to.

Request a title search from the Land Registry:

• The Land Registry maintains detailed records of property titles and any associated covenants.
• You can request a title search through the Land Registry’s online portal or by contacting them directly.
• The title search will provide a detailed report highlighting any registered covenants, including their nature and conditions.
• This search is particularly useful for uncovering historical covenants that may not be immediately apparent in the title deeds.

Seek professional advice from a solicitor:

• Consulting a solicitor who specialises in property law can provide you with expert guidance.
• A solicitor will offer a comprehensive review of your property’s title deeds and any findings from a title search.
• A solicitor can interpret the legal language of the covenants, ensuring you fully understand their implications and how they might affect your property use and obligations.
• A solicitor can also advise on any actions required to comply with these covenants or address any potential breaches.

Check planning permissions and local authority records:

• Local authorities may have records of planning permissions and other documents that reference restrictive covenants.
• Checking these records can provide additional context and details about any restrictions on your property.

Engage with neighbourhood or homeowners’ associations:

• If your property is part of a managed community or estate, the neighbourhood or homeowners’ association might have additional covenants or rules that you need to be aware of.
• Engaging with these associations can provide clarity and help ensure you are in full compliance with all local regulations and restrictions.

By taking these steps, you can comprehensively identify any restrictive covenants on your property, ensuring you remain compliant and avoid any potential legal or financial repercussions.

What Happens If I Breach a Covenant?

Breaching a restrictive covenant can lead to several serious consequences, including:

●      The party benefiting from the covenant (often a neighbouring property owner or the landlord) may take legal action against you.

●      A court may issue an injunction requiring you to comply with the covenant, which can include reversing any prohibited actions.

●      You may be liable for damages or compensation if your breach of the covenant has caused loss or harm to others.

It is essential to seek legal advice if you are unsure about any covenants on your property to avoid these potential pitfalls.

In What Instances Can a Landlord Forfeit a Lease?

Subject to the lease specifically providing the right for the landlord to do so, and the landlord first serving a Section 146 notice on the tenant requiring them to remedy the breach, forfeiture of a lease can be applied in situations where a tenant has:

●      Breached covenants stipulated in the lease agreement.

●      Caused persistent or significant delays in rent payments.

●      Used the property for unlawful purposes.

Landlords must follow specific legal procedures to enforce forfeiture should their tenants breach covenants. Tenants also have the right to challenge or remedy breaches to avoid losing their lease.

Can Court Proceedings Be Avoided Following Breaches of Covenant?

In many cases, court proceedings for breaches of covenant can be avoided through alternative dispute resolution methods. Parties often reach a settlement agreement, where the breaching party agrees to remedy the breach - for example, by paying compensation or covering associated costs - and the other party retrospectively consents to the action in question.

This approach enables both sides to resolve the issue swiftly and privately, without the expense and disruption of formal court proceedings, ultimately delivering a more expedient solution.

Legal Assistance and Advice

If you are involved in a dispute regarding a covenant breach, obtaining expert legal advice is important to avoid protracted legal complications and protect your property interests. At JMW Solicitors, our property dispute specialists provide comprehensive advice on all aspects of covenant-related disputes, catering to both commercial and residential properties.

Adopting a proactive and pragmatic approach to property litigation, we aim to resolve disputes efficiently and effectively, using the most appropriate strategy for the specific facts and circumstances of your case. We focus on achieving your desired outcome while minimising disruption to your property use or business operations.