Restrictive Covenants · Report on Title scenario
If there is genuinely nobody left to enforce it, there is nobody to give consent and nobody to object to its absence. A covenant requiring the written consent of a named company is only as alive as that company; where it was dissolved and its business was not taken over, the practical answer is usually that no enforcement is possible. The check is a matter of record rather than of opinion.
From the e-ROT archive
This scenario is drawn from Report on Title material dealing with this specific circumstance.
Companies House. The register shows whether a company still exists, when it was dissolved, and whether it was involved in a transfer of its undertaking. Your conveyancer looks there, and the answer is documentary.
The Lexsure wording below records that check being made and the conclusion drawn from it, which is the right shape for this problem: a fact established on the record, not an assumption from silence.
If a covenant you were told was unenforceable is being asserted, what was reported to you during the purchase is where the question starts.
Find out what should have been explained → WhenIBought.com<b>The business may have been taken over.</b> Developers merge, are bought and transfer their assets. If the benefit of the covenant passed with the undertaking, the successor can enforce it — so “the company is gone” has to mean gone and not absorbed.
<b>The benefit may have been assigned.</b> A covenant's benefit can be transferred separately, and there are companies whose business is acquiring exactly these rights.
<b>Property of a dissolved company can pass to the Crown.</b> Where it does, there may still in principle be someone in whom the benefit vests.
None of that makes the usual conclusion wrong. It means the conclusion rests on what the search found rather than on the company being hard to contact.
If the position is clear, it is clear, and no policy is needed. That is a better outcome than insurance and it is worth asking your conveyancer to state the basis for it in the report, because the next buyer's solicitor will want to see the reasoning rather than repeat the work.
Where there is any doubt — a successor company, an assignment, a covenant whose beneficiary is a person rather than a company — indemnity cover is the ordinary answer, and the ordinary rule about not approaching the beneficiary applies.
Keep whatever evidence was obtained. A Companies House extract filed with your deeds is worth having in fifteen years' time.
From the e-ROT archive
Report on Title paragraph
However following a telephone conversation with Companies House today they have confirmed that the company ceased trading some { } years ago and has not been taken over. Therefore there is no enforcement action which can be claimed against the property as the company does not exist.
Historic wording — DO NOT USE on a current transaction. Published in January 2019 and reproduced exactly, including the merge field. The conclusion it reaches rests on the facts that search found on that transaction.
Do not rely on wording copied or saved from this page. Get the current wording dealing with this scenario.
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