March 25, 2014 6:32 pm

House Rules: property law and overturning planning restrictions

Lifting old limitations on development and getting the answers right to insurers’ questions
Illustration by James Ferguson depicting property law©James Ferguson

1. Lifting old restrictions

I want to build a commercial unit on a piece of land I own but there is an old provision in the deeds that prevents building anything except private houses. Can I get it removed? Possibly. The Upper Tribunal (Lands Chamber) can overrule such restrictions but only if you can satisfy them that the restriction is obsolete, or if it prevents a reasonable use of the land, or that no one will be adversely affected if the restriction is removed. In practice, it can be tricky to convince them.

The plot is on a road where there are now lots of shops and restaurants as well as a few houses. Is that enough? It might be. The tribunal will look closely at whether a change in the character of the land affected makes the restriction obsolete. But in a recent case, the tribunal was not convinced that the arrival of shops, restaurants and petrol stations since a “residential only” restriction was imposed in 1864 had made enough of a difference.

What if my land had already been used for something like a doctor’s surgery? That had happened in a recent tribunal case. It convinced the judge to lift the ban on building commercial units, because whoever was entitled to enforce the ban must have known that it had been breached and had done nothing about it. So if you can find evidence of an earlier commercial use, it may help.

What if I can’t get the restriction removed? The other common way to deal with restrictions like this is to get insurance against the risk of someone enforcing. This is usually available, as long as there is no evidence of anyone having tried to enforce the restriction. You will have to give the insurer as much information as possible about the current and previous uses of the property, so do your homework.

2. Insurance – get the answers right

There has been a fire at my house. The insurers are refusing to pay out, because they say I didn’t answer their questions accurately when I took out the policy. Can they do this? They may be able to, if you didn’t take reasonable care to answer the questions properly. The law changed in April 2013. Before that, anyone taking out insurance was under a duty to disclose all material facts to the insurer. Last month, the Court of Appeal upheld an insurer’s refusal to accept a claim where the homeowner had not disclosed a previous fire at the property.

Would the courts have decided the same way under the new rules? Probably, assuming the insurers had asked a specific question that had been answered inaccurately. The new rules shift the focus, so that instead of having to volunteer all material information, the homeowner must take reasonable care to answer the insurer’s questions properly. This puts more onus on insurers to ask a clear and comprehensive set of questions and to make sure that you know that they could refuse to honour the policy if your answers are misleading.

What if I make a genuine mistake? If you have given a misleading answer because you were simply careless in checking the facts, insurers can still set the policy aside, if they can convince the court that they would not have entered into the policy at all if your answers had been accurate. If they would simply have offered different terms, they can treat the policy as if it contained those terms. Although the rules have changed, the principle remains the same – if you don’t give insurers all the information they ask for, you could end up out of pocket when something goes wrong.

Fiona Larcombe is a solicitor in the Real Estate team at King & Wood Mallesons SJ Berwin

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