The Shared Drive, the Roof Extension and the Three-Storey Permission
You act for Margaret, who is selling a former workshop building and yard (Plot B) to a developer, Halcyon Homes Ltd, for £750,000. Margaret retains the adjoining house and garden (Plot A). Access to Plot B is along a 3.5 metre wide tarmac drive that runs over Plot A. Margaret wants to keep a right to park two cars on the forecourt of Plot B, and to restrict Plot B to residential use only, with no building above two storeys. Halcyon has planning permission, granted last month, for a three-storey block of six flats, and its lender requires an unrestricted right of way for vehicles and pedestrians. The drive is the only access; there is no other route. The title to Plot A is registered; Plot B is unregistered and will be first registration. Margaret's mortgagee, Weybank, has a charge over Plot A. Exchange is due in four weeks.
1. Draft the operative easement clause for the right of way and explain how it should be registered.
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Easement clause: 'The Seller, as registered proprietor of Plot A, grants to the Buyer, its successors in title and assigns, a full and free right of way at all times and for all purposes connected with the residential use of Plot B, with or without vehicles, over the drive shown coloured blue on the plan, together with the right to connect to services and to pass for pedestrians. The Buyer shall contribute one half of the reasonable cost of maintaining and repairing the drive. The Seller shall not obstruct the drive or park on it.' Because Plot A is registered, the grant should be completed by deed and registered against both titles: a notice against Plot A and, on first registration of Plot B, the benefit should be entered. The charge in favour of Weybank must be considered: obtain Weybank's consent to the grant and ensure the easement is not prejudicial to its security. If the easement is legal and registered, it binds successors. If it is not registered, it may be overriding, but the lender will require registration.
2. Draft the restrictive covenant and advise on the conflict with the planning permission.
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Covenant clause: 'The Buyer covenants with the Seller and the owners for the time being of Plot A that the Buyer shall not: (a) erect any building on Plot B exceeding two storeys or 8 metres in height; (b) use Plot B otherwise than as a single residential dwelling or flats; (c) carry on any trade or business on Plot B.' The conflict is immediate: Halcyon's planning permission is for three storeys. Planning permission does not override a private restrictive covenant; if Halcyon builds three storeys, it will breach the covenant, and Margaret could seek an injunction or damages. Halcyon's lender may also require a clean title. Options: (1) negotiate a modified covenant permitting three storeys but imposing design and height controls; (2) Margaret accepts a deed of variation in exchange for a capital payment; (3) Halcyon applies to the Upper Tribunal (Lands Chamber) under s.84 Law of Property Act 1925 to modify or discharge the covenant, but that is uncertain and slow. Margaret should not exchange without deciding whether she will enforce the two-storey limit; a covenant she does not intend to enforce may be challenged as obsolete.
3. How can Margaret ensure the covenants and easements bind successors and are not defeated by the lender?
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To bind successors: (1) The easement must be granted by deed and registered. For Plot A (registered), apply for a notice in the charges register; for Plot B (unregistered), the easement and covenant must be included in the transfer and noted on first registration. (2) The restrictive covenant must be protected by a notice or caution against first registration; once Plot B is registered, enter a notice in the charges register. (3) Weybank's charge over Plot A: obtain written consent to the grant and confirm that the easement does not prejudice its security; if the covenant benefits Plot A, note it in the charge documents. (4) Include in the sale contract an obligation on Halcyon to procure registration and not to object to the notices. (5) Advise Margaret that a positive covenant to maintain the drive may not run with the land; use an estate rentcharge or a chain of indemnity covenants to secure payment. (6) On completion, register the transfer and charge promptly.