There seem to be endless television programmes about becoming rich through property development, and with interest rates at their lowest point for many years, some see property as a sure way to make easy money.

Trust a solicitor to put a dampener on things, but if it looks too good to be true, then it probably is. With a greater number of buyers out there, developers are increasingly having to look at "problem" sites in an attempt to make a profit.

So what are some of the potential pitfalls?

Restrictive covenants - these are restrictions on the development or use of land, enforceable by one landowner against another. With agricultural land, for example, it is not uncommon to find restrictions that prevent building work - or any uses other than farming.

Subject to various rules, covenants will be passed on so that they apply to, and are enforceable by, later owners of the land.

If the covenant is binding, the courts can grant an injunction prohibiting the intended development, or award compensation to the person with the benefit of the covenant.

If the covenant is a recent one - say ten or 15 years old - buying out the person with the benefit will probably be the only option.

If the covenant is older, there may be other options, such as taking out indemnity insurance. Such policies are becoming increasingly common, with the insurer agreeing to compensate the insured against losses suffered arising from the covenant, such as the cost of buying out someone with the benefit.

However, these policies can quickly become outdated as property prices rise. Insurers are also much less likely to take on a site if the person with the benefit of the covenant can be identified and has already been approached for a release.

Another option is to apply to the Land Tribunal for the covenant to be modified or released. This can be a costly and time-consuming procedure and is generally used only as a last resort.

Easements - an easement is an agreement that confers on a person the right to use someone else's property in some way. While an easement grants rights, it also has the effect of restricting an owner's use of those parts of his land that are affected.

There are many other pitfalls out there for the unwary, but with the right legal advice, solutions can usually be found.

* Marc Turner is a solicitor in the commercial property team of Blackett Hart & Pratt. For more information, contact him on 0191-332 4583.

Published: 18/10/2005