Restrictive Covenant Headaches Lead to Indemnity Insurance Increase
There are many reasons why people do, and need to, work from home. Indeed, the internet and the ability to have a fully functioning office from home have transformed the way and the place that many persons work.
Whether it is a professional person working as a sole practitioner, a new business start up from somebody who has had the misfortune to be made redundant, a man repairing or doing up cars in his garage, an existing business that is relocating, or an eBay business that has just got out of hand, there are many types of business that can end up working from a home environment.
In some cases there can be a breach of planning laws and in other instances the activity could be interpreted as a breach of covenant, should there be a restrictive covenant attached to their Deeds.
There are many reasons why these restrictive covenants have been put on deeds in the past, including developers wishing to protect the environment for adjacent properties also being developed by them as well as ex-local authority houses which are typically sold into the private sector with restrictive covenants.
For a restrictive covenant to be valid, there does need to be a legal beneficiary. All these restrictive covenants (whether restricting working from home or the number of pets you are allowed to keep in a property) are called restrictive covenants because it restricts what you can do with your land or property.
The precise wording always has to be examined as this makes a potential huge difference with regard to the restrictive covenant being held to be valid in court.
We are not yet aware of a case where a professional person working on their own with the benefit of the internet from their own house has been forced to move or stop due to a restrictive covenant. This type of work has only realistically been possible over the last few years since the internet, emails and phone diversions to mobile phones have all become common place. For other businesses the difference can be more obvious and clear cut.
Many more legal advisors are being asked about any such restrictive covenants which can in some instances abort a sale.
An increasingly common solution is to obtain a restrictive covenant indemnity insurance policy, by paying a single premium which would protect the occupier if a claim was made.
Such a policy can be designed to pass over to any subsequent property owners should the property be sold in due course or be occupied by others. This is also a fairly quick process which a prospective purchaser in the current market can often insist that the vendor pays for.