Covenant Against Hmo

[Delbow 699]

If you are selling a house, is it possible for your conveyancing solicitors to alter the contract so that the buyer is not able to convert it to an HMO, and if so, how easy/difficult is this to do? Probably a bit of a niche question, but I wondered if anyone's looked into it.

[Jim Hardie 527]

Alter the contract after it’s been signed?

[carosio 186]

Interesting.  As a layman, I would guess a suitable Restrictive Covenant would be introduced into deed of sale, but there could be ways around it by the future owner(s).

As I understand it, the seller would have to start legal proceedings if future owners break the covenant.

[Jim Hardie 527]

It would surely depend upon the stage at which the covenant is to be introduced. If a price has already been agreed it would then be down to the purchaser’s solicitor to inform his client who may wish to withdraw or renegotiate the purchase price.

 

[Delbow 699]

2 hours ago, Jim Hardie said:

Alter the contract after it’s been signed?

No, I mean deviate from a standard contract to add a covenant. If I was going to do it, I'd be upfront about it from the start.

[carosio 186]

Interesting link:    https://www.pistonheads.com/gassing/topic.asp?t=1869171

[geared 311]

On 07/05/2021 at 15:48, Delbow said:

No, I mean deviate from a standard contract to add a covenant. If I was going to do it, I'd be upfront about it from the start.

Can be done, but it doesn't mean the new owner will pay any attention.

 

Usually you'd be the one to deal with them if they did break it, which is more cost and hassle further down the line.

[Jeffrey Shaw 90]

Real answer:

1. If V wants to impose a covenant on P, the contract as exchanged has to say so. It's impossible for one party acting alone to change the contract after exchange.

2. BUT it's not the contract that creates the covenant; it's the Transfer deed (or Lease etc.) reflecting the contract's contents.

3. Moreover, V cannot easily enforce the covenant against P/P's successors in any case unless:

a. V retains land to which the benefit is annexed; and

b. V's benefitting land is clearly defined AND abuts- or is very near to-the land that V's selling to P; and

c. the precise wording shows that the covenant is intended to be permanent and not just a personal obligation on P; and

d. the covenant's benefit is registered on V's benefitting land's title and its burden against the land that V's selling to P; and

e. non-compliance by P/P's successors can be shown to cause a loss on the part of V (e.g. reduction in value of V's benefitting land which would quantify what V could claim).

Edited May 9, 2021 by Jeffrey Shaw

[Delbow 699]

On 09/05/2021 at 15:42, Jeffrey Shaw said:

Real answer:

1. If V wants to impose a covenant on P, the contract as exchanged has to say so. It's impossible for one party acting alone to change the contract after exchange.

2. BUT it's not the contract that creates the covenant; it's the Transfer deed (or Lease etc.) reflecting the contract's contents.

3. Moreover, V cannot easily enforce the covenant against P/P's successors in any case unless:

a. V retains land to which the benefit is annexed; and

b. V's benefitting land is clearly defined AND abuts- or is very near to-the land that V's selling to P; and

c. the precise wording shows that the covenant is intended to be permanent and not just a personal obligation on P; and

d. the covenant's benefit is registered on V's benefitting land's title and its burden against the land that V's selling to P; and

e. non-compliance by P/P's successors can be shown to cause a loss on the part of V (e.g. reduction in value of V's benefitting land which would quantify what V could claim).

Thank you, that's helpful.