Q. What is a Covenant?
A. There are two types of covenant – a Lease and a Land Covenant. If you are looking at purchasing a leasehold property you would without doubt be entering into a lease agreement with the freeholder/landlord to lease the property for a fixed number of years. This may be 99 years, 125 years or even 999 years on occasion. The freeholder is in essence still the owner of the land that your property sits on and for the right to use the property during the term you will pay an annual ground rent to the freeholder.
The ground rent can be from a peppercorn (so called because many years ago the ground rent would be paid in corn) up to £250 per year or depending on the development in some cases even higher.
You may find the lease contains a number of conditions which are legally binding requirements that both parties have to follow, which are known as “covenants”.
Covenants are rules and regulations relating to a property, which are stated in the lease or title deeds. A covenant is a binding promise to do, or not to do something i.e. not to have pets in the property.
Should a covenant be broken, it can be enforced by the innocent party i.e. if a landlord breaks the covenant to insure the building or if the tenant breaks the covenant to pay his/her service charges then the innocent party can sue.
There are many leases where the covenants may become unenforceable or where the property has significantly changed. Again you may be advised to take out a restrictive covenant policy. Land covenants in comparison to Lease Covenants can restrict certain uses of land or property and are sometimes called restrictive covenants. These will normally have been put in place by a landowner or developer and these covenants can be passed down through generations.