30 I frequently joke with a friend, who happens to be hopeless with anything technical or mechanical, on his attitude to paperwork and instructions. I maintain his first step when buying anything new is to immediately locate the instructions in the box and then throw them away. He then proceeds to try to get the item to work on pure luck, and guesswork; he usually fails and then asks me for help. I can relate this to my work. When giving advice to clients for the first time, I usually have two questions; where’re your deeds and do you have a will? The inheritance and succession issue is another article in itself, but, the reason I ask for the deeds is that I find that most clients don’t know what’s in them. I’m looking for restrictions in how their property can be used as the client usually has a proposal to consider; perhaps a sale, a new building/ development project or looking to raise some money. Restrictions can have a big impact on value, and therefore, strategy; yet time after time such restrictions are forgotten about or in some cases simply not known about. I broadly think of restrictions in land falling into three categories, Restrictive Covenants, Statutory/Planning and Clawback/Overage. Restrictive Covenants Restrictive covenants are in simple terms, a promise not to do something on your land so as not to detrimentally affect land that was in the same ownership (retained land) from the person you acquired from. Such covenants are commonplace and it’s rare to see the conveyance without them. Prior to the introduction of clawbacks/overage, they were used as a method of extracting extra value from land that had been previously sold on the basis the previous owner needed to give consent for a particular activity. For example, if there was a restrictive covenant that said land can only be used for agricultural purposes only, then consent would be needed before that land could be developed for housing. Such consent would normally come with a price. At the start of the 19th century, the government realised that national infrastructure was being inhibited by previous landowners demanding large ransom sums to release restrictive covenants in cases when development would have no detrimental effect on retained land. The Law of Property Act 1925 put in place a mechanism where restrictive covenants could be modified or removed with compensation being payable to the previous owner on the basis of their loss, not on the basis of the increase in value due to development. The Upper Tribunal (Lands Chamber) deals with these cases and a person affected by a restrictive covenant can apply to have it modified or removed to allow their proposals to proceed. The practical issue is that with any litigation, such action can be costly and take a considerable amount of time. There’re also important pre-requisites before making such an application such as obtaining planning consent for your proposals. In some cases, it’s possible to insure relatively cheaply against any restrictive covenant issues, particularly if the covenants are old. However, if you ‘break cover’ and contact the owner of the covenant, the insurance opportunity may be lost. If insurance is not possible then “ There is, however, a common theme in that the old adage ‘time spent in reconnaissance is seldom wasted’ and I apologise for using this cliché yet again HOW WELL DO YOU KNOW WHAT YOU OWN? Andrew Entwistle looks into the world of property restrictions, the impact on value, and why it really is important that you know what you own.