Removal and Modification of Restrictive Covenants

A restrictive covenant attached to a property may prevent a developer from building on the property.  However, the covenant can be modified or even discharged by making an application under Section 84 of the Law of Property Act 1925 ('the Act') to the Lands Tribunal.

Who can make such an application?

The Act authorises “any person interested in any freehold land affected by any restriction” to apply to the Lands Tribunal.

Who can object to the modification or discharge of the covenant?

The Act gives all interested persons an opportunity to object.  The Tribunal also has to act with the planning activities of local authorities and government departments. 

Modification/Discharge of the Restrictive Covenant under section 84 of the Act

Discharge or modification is a two stage process.  The applicant must first satisfy one or more grounds under the Act and then, if those grounds are made out, the Tribunal must be satisfied that it is appropriate to make an order.

Grounds for Jurisdiction

The Lands Tribunal must have the jurisdiction to modify or discharge a restriction, otherwise it will be unable to act.  The applicant must therefore satisfy the Tribunal on one or more  grounds including material changes deemed to be obsolete or an imposition on a “reasonable user”.

Compensation

If the Tribunal discharges or modifies a restrictive covenant, it may award compensation to the person entitled to the benefit of the covenant one of the following remedies:

• a sum to make up for any loss or disadvantage suffered by that person in consequence of the discharge or modification; or

• a sum to make up for any effect which the restriction had at the time when it was imposed (i.e. when the person who originally had the benefit of the restriction sold the land affected)  in reducing the price paid for that land.

Whether, and if so to what extent, compensation will be awarded in a case will depend partly upon the Tribunal’s reasons for discharging or modifying the covenant, and partly upon the circumstances of the individual objector.

The Discretion of the Tribunal

Even if the Tribunal has jurisdiction to resolve the issue, the applicant is not entitled as of right to an order for the discharge or modification of the restriction or for compensation.  The Tribunal has a discretion which it must take into account in considering whether to invoke its powers.  The element of discretion can operate only against the applicant as there is no discretion to make an order if the applicant fails to make out one of the grounds under the Act required as the first stage of the process.

Conclusion

An application can be made to the Lands Tribunal to modify or discharge a restrictive covenant, assuming that the applicant can fulfill the requirements set-out above, and the Tribunal can modify or discharge restrictive covenants to the extent that they fail to serve a significant, practical purpose.

Article First Published: 21 April 2005

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