Module 2 · Chapter 4

The Covenant

An old covenant on the title forbids the use the buyer plans. Insurance, not a release or a tribunal order, is the usual answer, and both sides make promises to keep the cover safe.

≈ 11 min read 8-question test

In this chapter

  • Why an old covenant can block a buyer's plans
  • Three ways to deal with it, and why insurance won
  • The promises in the contract and the transfer that protect the cover

4.1The covenant in one paragraph

The register of Beckside Works carries a restrictive covenant from 1962: the land may be used only as a printing works. Fellgate is buying the building to assemble electric bicycles, so its use will break the covenant. The covenant binds Fellgate as the next owner, because it is protected on the register. Anyone who holds the benefit of the covenant could go to court to stop the use.

Key point

Fellgate cannot remove the covenant before completion, but it can insure against it. Keeping that insurance valid shapes the rest of the deal.

Also in this chapter

  1. What the covenant forbids
  2. Who can enforce the covenant
  3. Three ways to deal with a covenant
  4. The policy and its conditions
  5. Who pays, and the seller's promise of silence
  6. Why each seller takes a fresh promise
  7. Fellgate's promise in the transfer
  8. Your job

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