Claim Case Study: Restrictive covenants in a lease Background The insured owned and resided in a first floor flat situated directly above a shop. The flat had wooden flooring throughout, which had been installed prior to the insured’s ownership. The owner of the shop below complained that the noise being generated from the flat was affecting his business and requested that the insured lay carpet in the flat to rectify this.
Challenge Unfortunately for the insured, there were restrictive covenants in their lease which stated that they were not to cause disturbance to other occupiers of the building and that all floors of the premises must be covered with carpet or other effective sound-deadening material.
Fortunately for the insured, he had a title insurance policy with First Title, which provided cover in the event of a claim by a third party enforcing the restrictive covenants in his lease.
Solution In order to resolve the claim, First Title paid the insured the amount required to carpet the whole flat. This remedied the breach of the restrictive covenant and removed the threat of enforcement action being taken against the insured by the freeholder.
The insured received a letter from the freeholder of the property informing him that he was in breach of restrictive covenants in his lease. The freeholder requested that the insured rectify this by carpeting the whole flat, failing which they would take legal action against him.
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