Tuesday, May 20, 2008

Restrictive Covenants - Jamaican Examples

Some people view the concept of restrictive covenants as somewhat perplexing and depending on the issues surrounding a particular case the issue can seem obscure. One thing that is important to understand is that adjoining Lots A and B will be subject to the same list of restrictive covenants if their homes form part of a building scheme. Since those covenants restrict both lot owners from doing certain things which will affect the land each lot owner similarly benefits from the covenant on his neighbour's land.

For those buying or selling real estate in Jamaica, let us look at some practical and common examples.

User

“The building on the said land shall not at any time be used for the purposes of a club school chapel or church and no trade or business whatsoever shall be carried on upon the said land or any part thereof and the said buildings shall be used for the purposes of a private dwelling house only.”

This kind of covenant addresses the use of the property. In many cases proprietors and/or their tenants occupy premises and conduct business in blatant breach of this covenant. As I had stated in my previous post in the event of an actual or anticipated breach of these covenants the adjoining owner for whose benefit the covenant has been imposed can seek legal redress. Adjoining neighbours who ignore this covenant often do so at their peril, as pretty soon the breaches may be copied by other proprietors and then the character of the neighbourhood will start to change, seeming more commercial than residential.

Boundaries

“No building or erection on the said land shall be nearer than Eight Feet (8ft) to the boundary of the said land on which the building fronts or nearer than Five Feet (5 ft) from any other boundary "

This kind of covenant is akin to a setback or the distance from which a building is set back from a street, a road or a river. In addition to these covenants, development orders also provide for setbacks. There are reasons for them such as to allow for privacy between neighbours, to reduce fire hazards, to allow for the free flow of storm water and to allow access to public utilities. Once again unfortunately in many cases breaches of these usually precede any consideration of enforcement of the covenant.

Subdivision

“There shall be no sub-division of the land above-described. "

This is often the first covenant shown on the title. Sometimes the wording includes "further sub-division". Modification is often sought for this covenant especially if the subject property is going to be used for the contruction of apartments or townhouses. Sometimes too, owners of large tracts of land cut them up into smaller lots for sale and subdivision is required in order for titles (usually referred to as splinter titles) to be issued for each individual lot. In this case in addition to the modification of the covenant, subdivision approval must be obtained.

Neighbours and purchasers must be vigilant. It is important to note that in many cases modification is sought in order to remedy an existing breach. The court will order that persons who are entitled to the benefit of the restriction must be served with notices of the application to modify or discharge the covenants. In addition, the applicant must advertise the notice in the daily newspaper. Persons who find the application objectionable must OBJECT!

As for purchasers, you must be mindful that the vendor can seek to extricate himself from the responsibility of rectifying breaches, so contracts for sale should be scrutinized with the expertise of an attorney. Further, remember to have the property surveyed by a Commissioned Land Surveyor. The financial institutions/mortgagees tend to have a zero tolerance policy where breaches occur because they do not lend on titles which are imperfect. Thus, even where the covenant breached is one concerning the distance to the fence and the breach occurs because the eave causes the building to be closer than mandated, the mortgagees will insist on modification.

Monday, May 12, 2008

Restrictive Covenants - Buying Real Estate in Jamaica

Having recently read some posts on the Trafalgar Council Blog which addressed widespread breaches of planning laws and regulations governing construction and community development I was motivated to address the issue of restrictive covenants.

A restrictive covenant is simply an agreement between a Vendor and a Purchaser where the Purchaser covenants that he will not do certain acts in relation to the use or the land. Originally a covenant at law was only enforceable against parties who had agreed to be bound under a contract. Instead of going into the legal details it is sufficient to state that with the assistance of equity the foundation was laid for a negative covenant to be enforceable against not only the original covenantor but also his successors-in-title. So we say that restrictive covenants run with the land.

In an earlier post I had stated that when securing financing to buy property in Jamaica, you will be required by the financial institution to submit a surveyor's report. This report will show if there are any breaches of restrictive covenant. The presence of the breach is in some cases very detrimental to a sale as sometimes it is so egregious it cannot be rectified except by demolition or by the expenditure of sums the Vendor may be unwilling to pledge.

If you are a prospective buyer you through your lawyer should conduct a title search. You will observe the restrictive covenants on the face of the registered title. This is particularly so where the lands are part of a housing scheme whether single unit, townhouse or otherwise eg. Harbour View, Mona Heights, Edgewater, Calabar Mews. In these cases the covenants are usually imposed via the transfer signed by the original owner/developer for each individual subdivided lot and the first purchaser.

We will address new subdivisions later but will add here that when an application is submitted to the parish council for subdivision approval, the authorities themselves will require that certain covenants be imposed in order to preserve the character of the neighbourhood. Thus a covenant may be imposed restricting the land from being further subdivided or restricting the use of the property to residential purposes. In the event of an actual or anticipated breach of these covenants the adjoining owner for whose benefit the covenant has been imposed can seek legal redress. Unfortunately this happens rarely or only in the case where the party in breach or who wishes to effect the breach seeks modification of the covenant and notifies his neighbours.

Under the Restrictive Covenants (Discharge and Modification) Act a restrictive covenant can be modified or discharged by way of an order of a court if certain conditions are met. If a breach is found the prospective buyer's mortgage institution will in most cases demand that it be corrected. Depending on the terms of your contract for sale this is usually an obligation of the Vendor and so the Vendor's attorney must agree to apply to the court to modify or discharge the covenant or to remedy the breach by altering the use of the land to comply with the covenant. If not the mortgage company will withhold part of the mortgage proceeds.

It is important to stress that even if a buyer is not borrowing from a financial institution to finance the purchase of real estate in Jamaica, he should secure the services of a land surveyor. If he pays cash and does not have his property surveyed for compliance with the boundaries and the covenants he may find himself in the uncomfortable position of purchasing property with a defective title for which he may himself have to pay the price of correcting in the future.