Unregistered restrictive Covenant

[Guest]

My parents purchased a property with land in 1988. The title deed quite clearly states that no more than two dwellings are allowed on the property and and also lays reference to a covenant on the land which we presume realties to this. They have since 1994 put in 3 planning applications which have all been passed without any objections. The beneficiary of the covenants (the vendor) lives across the road and is also on the parish council so has been aware of all applications. He stepped out of any planning meetings relating to this due to a financial interest. They have planning for 5 houses. One they started building 5 years ago, 2 they started 6 months ago. All in plain sight of the covenant beneficiary. My parents were not aware of the 30 year old Covenant (although the deeds do quite clearly state it) They have now received a letter from the vendor highlighting the breech and requesting a financial settlement. Having searched Land Registry the Covenant has never been registered which my understanding is that it has to be for it to be valid? Any help or clarification would be greatly appreciated.