Andreas Petrou and Kathryn Harris highlight some of the pitfalls that can delay or derail building projects
Land development is a tricky process. Aside from the land acquisition itself, obtaining planning permission and considering environmental matters, there are a number of other areas that can trip the unwary. This article examines a few of those issues that arise in a fairly typical development process, which should be factored in to the due diligence exercise.
Crane oversail rights
The use of cranes is a cost-effective and sometimes essential method of erecting high-rise buildings. One nuance of real property law is that a landowner enjoys rights in relation to the airspace above its property. A developer therefore should consider whether the use of any cranes will need to project into the airspace of sites adjoining the land being purchased.
In practice, the circumstances of the acquisition will determine the necessary steps to take. If the site being acquired for development is part of a larger estate and is surrounded by land being retained by the seller, a developer should ensure during negotiations with the seller that rights to use a crane over the adjoining land are granted as part of the overall deal, and catered for in the acquisition contract.
If, on the other hand, the land in question abuts land in different ownership, the adjoining owner should be identified and approached with a view to agreeing oversailing rights where required.
A developer may also require that the crane oversails a highway. If the road is adopted, both the local authority and the identity of the owner of the subsoil beneath the road will need to be determined and their consent procured. Highway safety should also be considered in these circumstances and a temporary road closure may be required while works are completed.
Rights of way
It is clearly important in a development context that either the land is not affected by any rights of way whatsoever, or, if it is, that those rights of way will not adversely affect the intended development.
Rights of way may be identified from investigating the title and from replies to enquiries of the seller, but this is not always the case. A thorough physical inspection should also be undertaken to identify signs of a right of way, such as a well-trodden path. Such a path, although not registered or identified on the title or via enquiries, may qualify as what is known as an overriding interest to which the land would be subject. It may be possible to divert a public right of way (for example by way of a public path diversion order), or in the case of a private right of way, to negotiate a diversion with the person with the benefit.
In addition to rights of way in favour of other parties, a developer should also consider whether it needs any rights of way over other land, either for works and delivery vehicles during the construction phase of the development, or rights of access to the development where it does not abut a publicly adopted highway. This situation is common in retail park developments, where the estate roads within the retail park may be private roads over which a developer may need access rights.
Problematic covenants
Covenants broadly fall into two categories, positive and restrictive. Generally speaking, a positive covenant imposes an obligation (the burden) to carry out action on the land, or requires expenditure of money – for example, on erecting fences. Restrictive covenants limit what may be done with the land, such as building restrictions. The differentiation is important, as the burden of a positive covenant does not generally bind successors in title, whereas the burden of a restrictive covenant may do so.
If it is apparent from the deeds that covenants exist, it is important first to determine the nature of the covenant and whether it is valid and can be enforced by the person or persons with the benefit of the covenant. The covenant may be fully expressed on the title, such that the nature of the covenant and the persons with the benefit are ascertainable. However, it may be that the title reveals covenants that are unclear, or it may simply be that the deeds refer to the existence of covenants but do not state to what the covenants relate.
Restrictive covenants can be particularly tricky for developers, as they can limit use of the land or restrict building. For example, it may be that a particular part of the land is affected by a covenant preventing any building being built or placed upon it. If the development as planned cannot go ahead without building on that part of the land affected by the covenant, and it is valid and enforceable, then the options are: to insure against the possibility of enforcement of the covenant; to negotiate a release or modification with the persons with the benefit of the covenant; or in the case of a restrictive covenant, to make an application to the Upper Tribunal (Lands Chamber) for a release or modification of the covenant.
The insurance available will depend on various factors including the wording and the age of the covenant. The covenant may be ancient and, depending on the circumstances, unlikely to be enforced. If insurance is an option, this should be discussed with the insurer prior to any negotiations with the persons with the benefit of the covenant, so that they are not put on notice of the risk of breach, thereby making the risk uninsurable. It may be that insurance is only available on a post-planning basis, in which case, of course, the developer may be in something of a “Catch 22” position, as the planning application itself may be deemed a “notification” to the potential persons with the benefit.
Rights of light
Rights of light issues can affect a developer’s ability to build, as well as the type and nature of building that can be constructed. Broadly speaking, a right of light is a right to enjoy natural light passing over another’s land and entering through defined apertures in the building.
This is an extremely complicated area of law. Suffice it to say that, when a developer is considering works which may impinge on the rights of light of adjoining landowners, he should always consider instructing a rights of light surveyor to undertake a detailed survey. The results of that survey should then be combined with a legal analysis in order to ascertain whether a neighbour’s rights of light will be affected.
Insurance may be available in the event that the results of the survey indicate that the development will impinge on a neighbour’s right to light. However, there remains the risk of an injunction being granted to either prevent the building being built, or to require its removal (in whole or in part), notwithstanding recent case law suggesting that injunctions will not be granted to restrain every infringement. Insurance may also only be available on a post-planning basis.
Problems with services/utilities
It is vital to carry out adequate due diligence of the land to be developed, not only with a view to fully understanding the nature of the ground to be developed (which may well present its own problems) but also to identify the various utilities at the site and any other public and private conduits that may exist on the land and which may affect development. Adequate searches of the land should always be completed.
Title investigations are also important, because where easements have been granted to install facilities such as water pipes, sewers, electricity cables and other conduits related to services, there is often a right in favour of the statutory undertaker (or other beneficiary) to enter on to and dig up an area of land around the conduit, and also a corresponding covenant restricting building over such areas. In those circumstances, negotiations would need to be entered into with the parties to those agreements in order that the development may go ahead as planned.
Where it is essential that development goes ahead over part of the land where conduits exist, the developer should seek to have those conduits diverted or relocated, or otherwise enter into a build-over agreement with the relevant utility company or owner.
Why this matters
“For the want of a search… the development was lost.” A touch dramatic, perhaps, but a developer may pay a dear price for not undertaking sufficiently detailed searches in respect of these issues.
For example, if neighbouring rights of light are ignored, a court may grant an injunction requiring that the building be reduced in height, notwithstanding that it had been completed two years earlier (HXRUK II (CHC) Ltd v Heaney [2010] EWHC 2245 (Ch); [2010] 3 EGLR 15). Similarly, if a developer builds on a right of way, the person with the benefit of that right of way may seek injunctive relief. Although the starting position is that a claimant in these circumstances is entitled to an injunction, as a result of the ruling in Coventry and others v Lawrence and another [2014] UKSC 13; [2014] 1 EGLR 147, whether such relief will be granted will depend on all the evidence. The court may consider all the circumstances, including the public interest, planning permissions and the financial implications for the parties – there is no “tick-box” approach. It is impossible to predict with any certainty whether an injunction will be granted.
If developers adopt a slapdash approach to surveying the land for utilities, they may face a claim for damages in nuisance and/or negligence. However, if they undertake all prudent searches and keep assiduous records of surveys undertaken, then such claims may be avoided, even in circumstances where piling works for foundations breach an old, disused private sewer resulting in concrete partially blocking the public sewer to which it was joined (Northumbrian Water Ltd v Sir Robert McAlpine Ltd [2014] EWCA Civ 685; [2014] PLSCS 155).
In the case of restrictive covenants, insurance may not be available, meaning a release of the covenants may need to be negotiated, or an application made to the Upper Tribunal. The costs of this must be borne in mind. Even if insurance is obtained, it may be that only the costs of demolition are covered and not the legal costs of defending a damages claim.
If agreement cannot be reached with neighbouring landowners for crane oversail rights, the developer may face increased costs of erecting the building and delay. If he goes ahead without a licence, the adjoining landowner may be able to persuade a court to grant an injunction. However, that is by no means certain following the decision in Coventry.
Andreas Petrou is a solicitor in real estate litigation and Kathryn Harris is a senior solicitor in real estate litigation at DWF LLP
