Both parties conveyancers interpreting covenant differently

[dom12345]

Good morning,

I would like to take other members views on the following matter. Perspective buyers would like to erect an outbuilding in the garden in order for them carry out furniture making for work purposes. The buyers solicitor is stating that doing so would breach the covenants in the second schedule, as they have interpreted the covenant to restrict an outbuilding being erected. The sellers solicitor is stating that no breach would be taking place as the covenant does not state that an outbuilding cannot be erected and in fact states that the covenant actually states that an outbuilding can be erected for furniture making purposes as furniture making comes under learned /artistic profession.

The specific covenants being referred to are listed below:

"Second Schedule:
1. Not more than one dwellinghouse with the usual offices and suitable outbuildings and conveniences shall be erected on the land hereby transferred.

2. No building erected thereon shall be used for any other purpose than as a private residence but there may be carried on upon the premises the profession or practice of a physician or surgeon or learned or artistic profession without other outward indication thereof than a brass plate covering the space of not more than Two feet by one foot.
"

Ultimately, the conveyancers are at stalemate with the interpretations and the sale has come to a hold until this matter has been resolved. The buyers conveyancer proposed to make contact with the original builders who erected the house (built in 1930s) to provide confirmation they have no issues with an outbuilding being erected (in order to satisfy that they wouldn't enforce the covenant). We did so, but no response was received.

Again, I would appreciate other peoples interpretations on the covenant and I also kindly ask for any recommendations of potential options available to get this over the line?

Thanks,
Dom

[des8]

IMO furniture design and making is an artistic profession, however furniture manufacture on its own may not be!
Remove the design element and it becomes just a manufacturing process.

I think it would depend on the scale of the operation, and the view of the beneficiary of the covenant.
If the buyer commenced operations and the beneficiary of the covenant challenged it could end up with a judge deciding about the meaning of the wording.

If the covenant can't be lifted has the possibility of purchasing an indemnity policy been considered?

[dom12345]

Hi Des8, thank you for the response!

Sorry I put 'furniture making', the exact purpose is 'furniture restoration', opposed to making / manufacturing. Would this change your view?

An indemnity policy has been considered but supposedly would not be valid because the outbuilding doesn't currently exist / no breach has occurred... would this be correct?

[dom12345]

IMO furniture design and making is an artistic profession, however furniture manufacture on its own may not be!
Remove the design element and it becomes just a manufacturing process.

I think it would depend on the scale of the operation, and the view of the beneficiary of the covenant.
If the buyer commenced operations and the beneficiary of the covenant challenged it could end up with a judge deciding about the meaning of the wording.

If the covenant can't be lifted has the possibility of purchasing an indemnity policy been considered?

Hi Des8, thank you for the response!

Sorry I put 'furniture making', the exact purpose is 'furniture restoration', opposed to making / manufacturing. Would this change your view?

An indemnity policy has been considered but supposedly would not be valid because the outbuilding doesn't currently exist / no breach has occurred... would this be correct

[des8]

I consider restoration work as a craft and therefore mainly an artistic profession, as it includes design work, carving, veneering, french polishing and many other activities.
A judge might not agree.
I suppose a lot will depend on the size of the "shed", the amount of work carried on and the use of power tools.

If the builders aren't responding has any consideration been given to having the covenant lifted or modified?

As the workshop is not yet erected one could not buy insurance designed to cover the position where a seller has breached a restrictive covenant which can't be easily rectified and as such the buyer wants to have insurance in place in the event the party with the right looks to enforce the covenant in the future.

[Scot22]

Could both parties agree to accept a qualified adjudicator whose decision would be considered final. Perhaps have thorough search for builder. If his company no longer exists where does that leave the covenant with No one to enforce it ?
is there another buyer interested ?

[dom12345]

Could both parties agree to accept a qualified adjudicator whose decision would be considered final. Perhaps have thorough search for builder. If his company no longer exists where does that leave the covenant with No one to enforce it ?
is there another buyer interested ?

Thanks for the input SCOT22. The company is dormant (opposed to dissolved) and is now a part of a chain of dormant companies acquired by Chinese nationals, residing in China, for the now purpose of using them as holding companies (albeit dormant). IF the covenant was to be breached, it would be extremely unlikely for these dormant companies to even have any interest in investigating whether any covenants inserted by previous land owners in the 1930s have been breached, let alone coming over to gather the evidence and enforcing them. Many other properties on the road that were also built by the original landowners have had outbuildings put for work purposes over the years and have had no issues, which should serve as reinforcement to the fact there isn't a breach or at least serve as reinforcement to there being no issues.

I am starting to think they may be purposely picking out this point in order to either 1) try reduce the price 2) delay time. In which case, your point about taking up another buyer is one I shall follow.