Build First, Ask Questions Later?
Recent decisions of the Supreme Court of Jamaica have confirmed the risk that proprietors and developers face in pursuing multi-family developments without first modifying the property’s restrictive covenants.
Restrictive covenants are provisions which prohibit the owner of property from doing certain acts, usually specified on Certificate of Title to registered property. Common covenants include restrictions on the use of the property (e.g., no commercial uses in a residential community) and controlling the type of residence such as limiting use to single family dwellings only.
Restrictive covenants most commonly arise where a large area of land is being developed for residential purposes and, for that purpose, is being subdivided for sale to individual owners. The initial developer or the local planning authority may opt to endorse restrictions on the titles which will bind all proprietors while also entitling each of them to enforce against a non-complaint proprietor.
Many of the restrictive covenants in force today are several decades old and the original owners are no longer in the picture. However, since the obligation of restrictive covenants are deemed to run with the land the original purchaser and all subsequent transferees of the property remain bound by them and, in equal measure, are entitled to enforce them.
Restrictive covenants can be changed or erased, but only by Court order. A proprietor is not entitled to begin to build or make changes to their property until and unless a Court makes orders changing the covenants. If another proprietor disapproves of the changes which the applicant is pursuing, they may formally object to the application in Court.
If there is an objection to the application to modify or discharge the restrictive covenants, the Court will need to be satisfied of at least one of the following factors:
- the character of the neighbourhood has changed in some material way, causing the Court to conclude that the covenants are now obsolete, meaning they can no longer serve their initial purpose;
- the continued existence of the covenant prevents all reasonable use for the property rendering it sterile;
- the proposed change of the covenant will cause no harm or loss to the persons entitled to enforce their benefit; or
- the proprietors entitled to the benefit of the covenant have agreed, either expressly or by implication, to the change in the covenant.
Additionally, the Court is entitled to consider the posture of the Town and Country Planning Authority and the local parish authority in determining whether to grant the application.
Our courts have found that, in addition to satisfying the criteria outlined above, the applicant must show that it is just and equitable for the Court to permit the changes it seeks. In applying this principle. Our Courts have held that the conduct of the applicant is a relevant consideration and that proceeding to build in open breach of the covenant and despite being aware of the objection is abhorrent conduct which may militate against the grant of the orders sought.
Our Courts have also expressed disapproval of the approach of proceeding to build, with the objective that the Court may award damages to the Objectors without making an order to remedy the breaches complained of. The Court has, on at least one occasion, made orders requiring offending properties to be demolished to the extent of the breach. You can imagine that a developer who proceeded to build a multi-family development in breach of a covenant which limits use to single family residence will stand to lose a great deal on his investment.
Making alterations to your property, without first obtaining the necessary approvals is risky business and, depending on the nature and scale of the alterations or development you choose to make, may result in serious financial loss.
Even without the risk of being ordered to demolish the offending structure, the developer may be stuck with an unsellable development as mortgage institutions routinely require confirmation of compliance with restrictive covenants before approving financing for purchasers. The rushed development may end up sitting as deadweight in the developer’s hands.
It may, after all, be better to ask for permission than to seek forgiveness.
Matthew Royal is an Associate at Myers, Fletcher and Gordon. He may be contacted at Matthew.Royal@mfg.com.jm or through the firm's website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.