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.