Anyone know anything about housing law?

[sprag5]

Just on the off chance anyone can shed any light on this? Apology for the long winded post!

 

The property i have a mortgage on i want to rent out; yet the two estate agents i have spoke to wont even come and value it as they say there is a covenant on the street not allowing the property to be rented

Now i have looked through my paperwork and found the title deeds and nothing is stated under charges register which i think that is where any covenants are stated

I have phoned my mortgage company who have said they cant see anything, i paid the land registry for a copy of title deeds which is exactly the same as the copy i already have and also the solicitor sent me the same copy!

 

So what are the estate agents seeing that i am not?

 

Any help or advise is very much appreciated

Thanks in advance!

[David P]

Maybe they know of a Senior Civil Servant who lives there?

[Chris Wilson]

Have you asked the letting agencies on what basis they believe the covenant to be in force, and enforcable?

 

Maybe this post on a landlords forum helps a little?

 

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1. Do the developer has the right to impose this covenant and is this enforceable?

 

There are two possible reasons for imposing the restriction:

 

A. The expressed one - to prevent buy-to-let investors and protect the neighbours. There is nothing in the letting of a property that makes it inherently detrimental to neighbours. The understanding is that certain classes of people will not be living next door to anyone who buys one of our properties. If the idea is protection for the neighbours one has to ask why the restriction is limited in time.

 

If that is the reason one could argue that the provision amounts to a restraint on alienation, that is that it seeks to prevent or impose conditions on any disposal of the property. On the whole such restraints are unenforceable. In this case the restriction does not directly impose a restraint, but effectively prevents letting by prohibiting occupation by anyone other than the owner and his family. Whether any particular restraint on alienation is enforceable is a question of degree and reasonableness. The fact that the restriction is only imposed for a limited period almost suggests that it is unreasonable. On the other hand is the restriction made reasonable by being limited in time?

 

B. An unexpressed one - the sole purpose is to protect the developer's interest. There are two aspects to that. The first is to ensure that nothing prejudices future sales. Up to a point imposing restrictions for that purpose is legitimate. It is not uncommon for time-limited restrictions on external alterations to be imposed so that the harmony of design is not disrupted during the selling period and that is fine. However, if the developer is thinking along the lines: "I'm not having buyers put off by seeing Polish flags flying on the estate" it starts to get a bit dubious.

 

The second is that the developer has at the back of his mind that if sales are slow he may want to do a bit of letting himself and does not want any competition. If that is the case then we are talking about a covenant in restraint of trade and that is not allowed.

 

In short, there are reasonable arguments that the restriction may be unenforceable but there is no guarantee that a court would be persuaded by them.

 

2. Should I ignore this covenant and go-head for the purchase?

 

Given that the legal position is not entirely clear, if you go ahead it has to be on the basis that the covenant is enforceable. You should ask yourself two questions. The first is whether the restriction is a problem for you while you own the property; the answer to that seems to be "possibly". The second is whether it will affect the saleability of the property within the next five years; the answer to that is "more than possibly". If you are thinking: "I'm not sure I like this", then so will others. I think your solicitor is wrong to be relaxed about the covenant as it is both unusual and onerous, even if restricted to a five year period. From his own point of view he needs to think about whether he is inviting a negligence claim. If you are getting a mortgage it is certainly something he ought to be reporting to the lender.

 

3. What would be the worst/practical situation if I rent out the house without obtaining consent from the developer?

 

If what went above deals with what the law may be, we now get to practicalities. It is pointless to sue for breach of covenant if you cannot show a loss or detriment. If it comes to the point where you want to let and permission is refused you can "take a view" on whether legal action will follow if you let without permission.

 

4. The clause has explicitly stated "occupied by immediate family". Would it mean I cannot have my friends to stay in the house?

 

No. I think that "occupy" here has to mean to occupy as a residence and not simply take up space

 

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[Tricky-Ricky]

Apart from anything else, you should of had something in writing when you bought the property, if not your solicitor was not doing his job, ours nearly lost us our house when we bought it because they miss read the covenant, it should appear when doing the land registry search.

 

 

However it may well be not enforceable if is out of date and not been renewed, a lot seem to non enforceable because the time limits are lapsed, you need a decent solicitor or do all the work yourself like I had to.