Indemnity Insurance for future (intended) breach of covenant

[gdtdk]

Hi;

We are in the process of buying a house, or rather a building plot with a house on it. We intend to either very substantially extend the house, or more likely we will demolish it to build a new one.

We have realized that there are some restrictive covenants, of which one is of particular concern.

This covenant has two requirements:
1. Not to build along one side of the plot
2. That no building shall be erected except in conformity with block plans and elevations previously submitted to and approved in writing by the Surveyor or Agent of the Vendor.

The first covenant is not a major concern to us. However, we understand that the second covenant requires us (in principle) to seek approval from the “Vendor”.

The covenant dates back to the original sale of the land in 1924. The “Vendor” is a Baronet of the time.

Due to the age and local environment we consider it very unlikely that the covenant will be enforced but as it is possible we would like to protect against this.

Is it possible to do this using a Breach of Covenant Indemnity Insurance (i.e. can this be done for intended future (non-specific) breaches?). If so, will this be very expensive (final price of the house could be well in excess of 500K) ?

I appreciate that specific answers may be difficult but any help would be very much appreciated. The original plan is to exchange in two days, and we are now very concerned about this issue that has just arisen.

Many Thanks!

[Richard Webster]

Usually possible once planning permission has been obtained. insurers will want to know if anyone objected to the application and if so on what grounds.

Sometimes people think that covenants are a reason to object under Planning. They aren't but if someone is really steamed up they will then root around to see if they can get the covenant enforced. Insurers will want to know about that kind of thing.

It is likely that the Baronet in question is dead. If the wording is such that it is clear that it is only the surveyor or agent of that individual and not of his successors in title then you may be able to prove he is dead and therefore the covenant is unenforceable and you wouldn't need a policy.

[gdtdk]

Hi Richard;
Many thanks for the feedback!.
The exact wording of the Covenant is “No building or structure of any kind shall be erected on the said land except in conformity with block plans and elevations previously submitted to and approved in writing by the Surveyor or Agent of the Vendor”.

We do know that the original Vendor is dead (he apparently died more than 60 years ago), so this is a very interesting point. My interpretation of the above would be that the statement refers only to the Vendor and not his successors. Does that sound reasonable ?

In contrast to the above, the generic part of the covenant does mention the Vendor his heirs and assigns.

The problem we have is that we do not have planning permission or indeed even finalized our plans. This will only begin once we have bought the property. However, we are afraid of buying the property without insurance, and therefore it feels like a Catch 22 scenario. Is it possible to get a generic insurance before any planning process has been started ?

The help is really appreciated as it is getting stressful here J.

[New Homes Expert]

I would seek legal advice.

You also need to take out defective title insurance as the covenant is so old.

[Richard Webster]

A solicitor can see if you can get indemnity insurance without a planning application but I would think it is unlikely.

The covenant would only seem to apply to consent to be given by that individual unless the expression "Vendor" is defined elsewhere to include his heirs assigns successors in title etc.