“It was a pleasure working with Andrew and Natalie throughout a complicated claim matter, they were often able to provide immediate responses, which meant that the matter could be progressed as quickly as possible through to completion; they were at all times friendly, approachable and commercially minded.“
Gareth White – Solicitor at Coodes Solicitors
April Update
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All Change!

Modifying restrictive covenants leads to unlocking value.

One of the skills which any investor in real property must have is the ability to see the potential in land. Such potential may be present in a number of ways, but this article focusses on the potential to change the use of land despite the presence of restrictive covenants which would otherwise inhibit change.

The law of restrictive covenants is a complex one, inhabiting an uncomfortable berth between land and contract law, rules of Equity and legislation which is nearly 100 years old. This article cannot explain that law. It will be assumed that the hypothetical investor will have been advised that there are binding covenants on the land which are enforceable by neighbouring land owners. But the covenants prevent the proposed development, which has planning consent. If it can be carried out, the net development value will be in millions of pounds. How can that value be unlocked?

The answer is the use of the jurisdiction in the Upper Tribunal (Lands Chamber) (“UTLC”) under s. 84(1) Law of Property Act 1925 (“s. 84”) to discharge, or modify restrictive covenants. There are a number of grounds in s. 84(1) under which this can be done. The one with the greatest chance of success is to show that the covenants impeding the development do not secure a practical benefit of substantial value, or advantage to those who can enforce the covenants. There are many cases about what this means. Invariably each application will turn on its facts on whether this test is satisfied. Applications under s. 84 can be hard to win, but it should be obvious that the reward for success, even after costs have been factored in, can be huge. What makes the applications more attractive now is that the UTLC is conducting final hearings of disputed applications under s. 84 generally within 4 months from the stage when the parties have completed the formal written stages of the application.

The importance of the jurisdiction under s. 84 cannot be over-estimated. The Government’s housing policy seeks to release more land for much needed housing, and there is a new Garden City movement supported by the Government. In addition, as it is economic to develop to a greater intensity, a policy generally favoured under planning law, land values warrant steps to remove covenant problems. Finally, there has been a growth in the “re-use” of sites where obsolescent houses are suitable for demolition with either replacement houses, or a greater number of houses, or flats being built.

The recent decision of the UTLC in Re Theodossiades’ Application [2017] UKUT 0461 (LC) is an example of a successful application to modify covenants which would have prevented a large late Victorian house, Gaisgill on Barnet Lane, Elstree, Herts, from being demolished and replaced by a single new building, with the appearance of a “mansion” house, containing 6 flats. Gaisgill, the objectors land, and other land to the east along Barnet lane, had been sold off in plots between 1886 and 1910 by a common vendor with covenants restricting development on each plot. The objectors (who could enforce the covenants on Gaisgill imposed in 1896 and 1900) were concerned not only with the modest detrimental impact of the development on their houses and gardens to the east of Gaisgill, but also with the effect which any modification would have as a precedent in leading to similar development on sites to the east of their properties. The latter objection was the main ground of objection pursued at the hearing. The Tribunal rejected that ground, finding principally that on the facts, there had been a large number of breaches of the covenants imposed on the land sold off by the common vendor, and technical reasons, based on covenant law, as to why enforcement would be difficult against other plot owners seeking to redevelop in future.

For the investor in land, the lesson to be taken away from Re Theodossiades’ is that it is not impossible to unlock value, despite the presence of covenants which might seem to make investment in land burdened by them a poor prospect. If planning consent for the development can be obtained (generally a prerequisite for a s. 84 application) and if the evidence supports one of the grounds, a skilled team of legal advisers and an expert surveyor should be able to achieve the discharge, or modification required. The task is not an easy one, but the economic benefits of the change can be huge.


© Andrew Francis

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Probate Insurance

As an underwriter, I first saw a presumption of death risk 20 years ago. A young professional person had gone missing at sea. A distress call had been made from their boat, but the coastguard was originally sent to search the wrong area. By the time the mistake was discovered, it was too late. There was no trace of the person, or the boat.

What often follows for the missing person’s family, is a roller-coaster ride from hell. Not only have they been denied a proper burial and the chance to say goodbye, but they face a struggle to obtain a death certificate and wind up the estate. Unfortunately, whilst your world may be crumbling, the mortgage still needs to be paid and the children fed and clothed. Also, there must always be the nagging doubt for the family left behind, what if they are not dead? What if they survived?

In the case of the young person missing at sea, the life insurance company would not pay out to the family. They wanted insurance to protect them, in case the person was not deceased and the presumption of death order obtained at court, was challenged.

Most of these tragic cases do not make the news. Some do though. John Darwin, now more commonly known as “canoe man,” went missing in 2002. He was lost when paddling out to sea in Hartlepool. No body was found. Four years later he was found to be alive and well, living in Panama. In 2007, he and his wife faced charges back in the UK for fraudulently claiming life insurance and defrauding the DWP, teachers’ pension scheme and their mortgage company. It is unlikely these companies and the DWP were able to recover their payments from the Darwin’s and their costs.

In Scotland, insurance is nearly always required by the courts, under the Presumption of Death (Scotland) Act 1977 Section 6, against the risk of a person having an interest in the deceased’s estate and seeking to have the decree varied or recalled. This means an innocent person’s interest is protected.

How does an underwriter go about underwriting such a risk and how can you tell a “canoe man” from a genuine, tragic, death? “It can be difficult,” says Kate Thorp. “Would I have issued a policy for the canoe man’s life insurer if asked, the answer is probably yes. What we do is look into the deceased’s life. Did they have any reason to fake their death? For example, were they in financial difficulties? We look at the circumstances of their death and how they went missing and often police reports are helpful in this regard and also press reports if they exist. We also look at their family situation.”

“I have also seen cases where a presumption of death order has been obtained for a missing beneficiary of an estate, to allow their inheritance to be paid to another family member, even when there is limited, or no information, to show they have died. The person had just disappeared, perhaps of their own choice.”

Presumption of Death insurance from DUAL can protect various interests, from the executors and administrators of the missing person’s estate, to the beneficiaries, trustees of pension schemes, purchasers of the missing person’s property and life insurance companies.

Kate Thorp - Executor & Inheritance Protection Manager at DUAL Asset Underwriting

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DUAL Asset Insight

It’s always daunting starting a new role. New journey to plan for, new people to meet and a never-ending list of new tasks and systems to navigate around. That’s how it was for me starting at DUAL Asset just three weeks ago. I was lucky enough to know a few of my new colleagues from a previous work place, so my walk into the new world was eased by familiar faces. Fast forward three weeks and I feel like I’ve been there all year!

My first week was spent trying to get to grips with the multitude of systems – in fact, I’m not going to pretend I have that mastered yet! Risk Write (DUAL’s bespoke underwriting system), websites, live chat, Microsoft Teams; it’s all a bit of a whirlwind and a lot to take in. However, one thing I felt confident with from the outset was that there’s always someone happy to help. I immediately felt like part of the team and was happy to ask my numerous questions without feeling like I was troubling anyone.

In my second week, I was feeling more confident with Risk Write and my knowledge was slowly returning with various bespoke legal indemnity risks. I have to admit, I was more tired than I’ve been in a long time and needing to get used to using my brain again! Pages of notes, a few headaches and roughly 1,000 questions later, I felt like I was starting to be of help to the team! It’s one of the things I am always concerned about when starting a new role; I always wish I could fast forward the first couple of months, so I can know exactly what I’m doing and just crack on!

Something I’ve found particularly interesting working for DUAL Asset is having the team span over several offices. I have never worked for a company where I have colleagues in London and Manchester, as well as Norwich! I thought it was going to be really difficult getting to know everyone, but as opportunities arise to talk with people, I am finding everyone incredibly friendly and keen to make me feel welcome. I’ve yet to visit the other offices, but I am really looking forward to meeting everyone and putting faces to names.

So I love the work, I love the team spirit and the icing on the cake – the social aspect. I’m not sure I’ve ever worked somewhere with a team so keen to take a trip to the pub – I think I’ve found my spiritual home! I cannot wait to see what the future brings with DUAL Asset, as I am already feeling like it’s a challenging and fun environment with fantastic opportunities. Roll on the strategy event in Amsterdam!

Terri Hatton - Underwriter at DUAL Asset Underwriting

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Breach of planning

Recent stories have come to light where secret building works had been found by local planning officers, meaning homeowners should be aware that planning departments will look for potential breaches.

Homeowners looking to extend their property should also make sure they have the correct permissions in place before building begins.

One recent case relates to a planning breach in Leicestershire for building a “secret house” in a garage, where a couple - Reeta Herzallah and Hamdi Almasri - were ordered to pay more than £2,000 each for deliberately trying to hide the "habitable accommodation."

The BBC reported that Ms. Herzallah said the couple were "hard working" and "law abiding" and that they’d been advised by a builder that the conversion, in Old Church Road, was permitted.

With cases like these becoming more common, homeowners should be aware that there are building regulations products that potentially cover local authority enforcement action for breaches.

Building regulations insurance will typically be used by new purchasers where additions to the property are apparent, but in this case there is no evidence that building regulations consent has been obtained.

Wesley Timothy, LLB (Hons), Senior Underwriter at DUAL Asset Underwriting, a legal indemnity and title insurance specialist, says: “From an insurance point of view, whilst there are insurance products available that cover building regulation breaches, this particular case is a bit of a tricky one. We could potentially have covered an innocent purchaser and/or their lender for their respective losses down the line, but not Reeta Herzallah and Hamdi Almasri.

He continues: “It should also be clear that the onus for arranging planning permission should be with the homeowner, or by a reputable builder, who will clearly evidence the agreed planning permission before any work starts. Whilst this may seem like a headache and delay getting started, as we can see from the case above, having the correct planning can save you a lot of potential issues down the track.

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Claims Corner

A new month brings another satisfied insured!

We recently concluded yet another unusual claim involving possessory title to a piece of land adjoining the insured’s property, which they and their predecessors had used as amenity land for many years.

The insured received quite an aggressive letter of claim from the ‘true’ owner of the land, challenging their use, occupation and claim to ownership and demanding that the matter be rectified at Land Registry. During the claims handling process it was evident that the claimant was not prepared to accept the position on the ground and intended to proceed to litigation on the question of ownership. This would of course be fraught with risk and excessive costs, with no guarantee of a successful outcome for the insured, not to mention a huge amount of stress which no policy could compensate for.

After a year of negotiations we managed to reach a commercial agreement with the claimant whereby a payment of £30,000 was made in return for the claimant transferring their interest in the land to the insured, and thus the title issue was eradicated. The risk of future litigation has now disappeared and the matter has been resolved with minimum stress.

The insured’s solicitors, whom DUAL Asset employed throughout the process, said:

It was a pleasure working with DUAL throughout a complicated matter, they were often able to provide immediate responses, which meant that the matter could be progressed as quickly as possible through to completion; they were at all times friendly, approachable and commercially minded.