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F E Smith
F E Smith, Advocate
Category: Property Law
Satisfied Customers: 9335
Experience:  I have been practising for 30 years.
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I am interested in buying a parcel of land which includes in

Customer Question

I am interested in buying a parcel of land which includes in the registered title: "No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge is to be registered without a certificate signed by
Builder A Ltd of Property Business Park, Newcastle Upon Tyne or its solicitors that the provisions of paragraph 11.4 of the Transfer dated 21 May 2006 have been complied with". The land was previously sold by Builder A Ltd to Builder B Ltd and since the two companies were linked it is assumed that the certificate was obtained. Paragraph 11.4 is a restrictive covenant preventing any building being erected on the land. The land was then sold to Miss S for a peppercorn, with her obtaining the certificate and Miss S is the current owner of the freehold. She also lives in a house on adjacent land. However Builder A Ltd and Builder B Ltd were liquidated about 3 years ago. If I acquire the land can the restrictive covenant be enforced since it is no longer possible to obtain the certificate?
Submitted: 8 months ago.
Category: Property Law
Expert:  Nicola-mod replied 8 months ago.
Hello,
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Customer: replied 8 months ago.
I will wait for an answer
Expert:  Nicola-mod replied 8 months ago.
Hello,
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Expert:  F E Smith replied 8 months ago.

I will try to assist you with this. What does clause 11.4 in the transfer dated 21 May 2004 say?

Customer: replied 8 months ago.
11.3 Restrictive covenants by the Transferee:
The Transferee covenants with the Transferor for the benefit of Builder A Ltd and to bind the Property that the owners of the Property will not:
11.3.1 Use or permit the Property to be used 11.3.1.1 for any purpose other than open land grazing open space nature or conservation use.
Positive covenants by the Transferee. 11.4 Deed of Covenant - ensure that all new owners of the Property enter into a Transferee's Deed of Covenant with Builder A Ltd before they are registered as proprietor of the Property:
11.4.1.1 to apply to the Land Registrar for a restriction to be entered onto the registered title in the same form as the restriction set out in para 11.6.1, and
11.4.1.2 not to transfer or otherwise dispose of the Property without ensuring that any transferee or other person to whom a disposal is made enters into a direct covenant with Builder A Ltd on the terms of this covenant.11.6 Restrictions and other entries on the register:
11.6.1 The transferor and the Transferee apply to the Land Registrar for a restriction to be entered on the title to the Property in the following Land Registry standard form:
"No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge is to be registered without a certificate signed by the (*) or its solicitors that the provisions of para 11.4 of this transfer have been complied with."
(*) The name of the company appears to have been omitted in error.
Expert:  F E Smith replied 8 months ago.

Thank you. This is actually more problematical than it looks.

Whilst if Miss S breached the covenant, there is probably going to be no-one to enforce it apart from the liquidator (who will not be interested) or anyone who bought the assets of the company including the benefit of this covenant (unlikely), and in any event she could obtain indemnity insurance to cover that unlikelihood, there is also no want to sign the transfer to satisfy the land registry.

Would not be sufficient to simply prove that the company had gone into liquidation. When registering your interest/title in the property the land registry would not do it either without an order of the court or from someone purporting to act on behalf of the company and that person would be the liquidator.

Hence, you are going to need to find out who the liquidator is and contact the liquidator. You may can get that information from companies house records. The liquidator may or may not be interested but the liquidator is certainly going to want some money for dealing with this because what they do when they liquidator company is try to get in as much money as they possibly can.

There is no value calculation for this. It is as much as you are willing to pay and as much as they will settle for signature on the deed to release the covenant. There is obviously a legal cost in drafting the deed of release and that on its own would probably be a few hundred pounds. Am the liquidator is going to do is look at the value of this property with the covenant and the value of the property without the covenant and make their mind up as to what this would be worth potentially to a buyer.

If miss S, having bought the property for a peppercorn is going to sell it for not much more and you are thinking of picking up this land for a song and being able to develop it by removing the covenants, that is most unlikely to happen. It can happen but I think it’s unlikely.

If the liquidator is for some reason not contactable, you would need to make an application to court to have the covenant removed and to provide evidence of the attempts you had made to contact them.

Can I clarify anything else for you?

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The thread remains open. We can still exchange emails.

Best wishes.

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