Information on Real Estate Restrictions: Understanding Covenants and Overage Clauses
When embarking on a self-build project, it's essential to be aware of two key property law concepts: restrictive covenants and overage. These terms can significantly impact your plans and potential financial benefits from the project.
Restrictive covenants are obligations that restrict the use of the land in some way, for the benefit of other land. They can regulate the use or appearance of a property, potentially limiting what can be built or preventing construction altogether. For instance, a covenant may require you to build exactly according to original plans or prohibit any changes without approval from the original developer, effectively banning extensions, outbuildings, or alterations—even if they are normally allowed under planning laws or permitted development rights.
On the other hand, overage is an obligation that requires a buyer to make a further payment on the land in the future, triggered by an increase in the land's value. This can impact the financial benefits a buyer gains from building on or selling the plot later. Overage can be a separate agreement or incorporated into the title deeds.
The implications of these agreements can be far-reaching. Restrictive covenants may limit future developments, alterations, or extensions, regardless of planning permission. They might bind successive owners, meaning future buyers also face these restrictions. Overage agreements can mean additional payments or profit-sharing obligations to the original seller after development. These restrictions can reduce the market value or desirability of a self-build plot, impacting long-term investment potential.
To investigate these issues before buying, it's advisable to:
1. Conduct a thorough title and legal search to uncover any restrictive covenants or overage clauses attached to the plot. 2. Review the planning permissions and related documents to confirm whether covenants restrict development beyond the original planning permission or require approval from previous owners for any variations. 3. Seek advice from a property solicitor to interpret the covenants and advise on negotiability, enforceability, and possible workarounds. They can also check if the covenant might be challenged as unreasonable or contrary to public policy. 4. Investigate historic and current land use to uncover any long-forgotten rights or obligations that may still be enforceable. 5. Consider indemnity insurance to protect against potential breaches of restrictive covenants.
By performing these due diligence steps, prospective buyers can better understand the limitations imposed by restrictive covenants and overage, helping them avoid costly surprises and ensuring their self-build ambitions are achievable. It's also advisable to be aware of overage when looking for a plot for a self-build home to avoid the issues they can bring. Overage does not prevent building, but it obliges the owner to make a payment of the agreed share of the increase in value. An overage obligation is triggered by one or more 'trigger' events, such as the sale of the land or the completion of a building project.
Lastly, remember that the existence of planning permission does not exempt a plot from restrictive covenants. Before buying a plot, it is crucial to have a solicitor review the title deeds to understand how covenants might affect the project. A common restrictive covenant is to prevent building without prior consent.
In conclusion, being well-informed about restrictive covenants and overage agreements is crucial when considering a self-build project. By taking the time to investigate these issues, you can ensure that your self-build ambitions are achievable and avoid costly surprises down the line.
- When building a home, careful planning is necessary to account for potential restrictive covenants, which may regulate the use or appearance of your property, and could limit what you can build or prohibit construction altogether.
- Overseas travel for fashion-and-beauty shopping can be expensive, but planning your budget wisely and researching sales and discounts can help you find the perfect styles within your means.
- If you're thinking about expanding your home with an addition or an outbuilding, include a review of any restrictive covenants in your planning process to avoid unexpected obstacles that could derail your project.
- The cost of a self-build project can add up quickly, so it's essential to create a realistic budget that includes all expenses, such as materials, labor, and unexpected hiccups along the way.
- When considering a self-build project in a new location, be aware that covenants might bind successive owners, meaning future buyers could also be subject to those restrictions, which could impact resale values.
- Building a home is about crafting a space that reflects your lifestyle, but before embarking on a self-build project, it's crucial to investigate any restrictive covenants or overage clauses attached to the property to avoid costly surprises.
- Pets require regular care and attention, and when traveling with them, research the pet-friendly accommodations in your destination to ensure a smooth and enjoyable trip for both you and your furry friend.
