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Deed Of Covenant – Deed Of Covenant Meaning

Deed Of CovenantBuying a leashold property and want to know what a deed of covenant is and what it means to you?

What Is A Deed Of Covenant When Buying A House?

A deed of covenant is a legal deed which sets out conditions that you must carry out or terms you must follow when buying a house or a leasehold property.

It usually protects the freeholder, the person who owns the freehold land to which a flat, apartment or maisonette

sits on, to ensure those living on the property follow the terms and conditions stipulated in the deed of covenant.

Why Is A Deed Of Covenant Required?

It is needed to ensure that any terms or conditions that the owner of a freehold property wants to be enforced are legally enforceable if they are breached.

What Sort Of Terms Or Conditions Are Included In A Deed Of Covenant?

Terms or conditions in a deed of covenant usually prevent the occupier of a building from doing certain things, or insist that they meet other conditions.

When used in a prevention way, a deed of covenant can stop a tenant or leaseholder from sub letting their apartment, running a business on the premises, making excessive noise or even letting rooms on platforms such as Air BNB.

When used in a positive way, a covenant can be used to to ensure that service charges on the leasehold property are paid promptly, communal areas of the property and the exterior areas are well maintained and agreeing to certain funds being spent on maintenance of the property.

Is A Deed Of Covenant Required For A Leasehold Property?

As they usually only apply to leasehold properties, and prevent the leaseholder from doing certain things, such as sub letting their apartment, running a business on the premises, making excessive noise or even letting rooms on platforms such as Air BNB.

Is A Deed Of Covenant Required For A Freehold Property?

Whilst they are rarely needed for freehold properties, they can be used if you are buying a freehold property on a managed estate, to ensure you pay any maintenance or service charges to the estate owner.

How Long Does A Deed Of Covenant Take?

It will only usually take a few days for this to be written for you.

Licence To Assign And Deed Of Covenant.

If you decide to sell your flat, apartment or maisonette, you will have to pay any service or maintenance charges due until the date that you sell, and then pass on the deeds of covenant to the buyer under a licence to assign (which gives you permission to sell your property and assign the covenant to the new buyer).

Who Pays For The Deed Of Covenant?

The deed of covenant is usually paid for by the freehold owner of the land. They will ask their conveyancing solicitor

to draw up a deed of covenant and pay them for their time to do this. It will usually cost a few hundred pounds, depending how many terms and conditions are to be included in the deed.

What Happens If Someone Breaches A Deed Of Covenant?

If a leaseholder breaches any terms or conditions in a deed of covenant the freeholder can claim damages (compensation) for them for these breaches, to put them back in the position financially that they would have been if the leaseholder had complied with the terms of the covenant.

In some cases, if the breach is severe, it can actually lead to the leaseholder forfeiting their lease, in effect handing it back to the freeholder and losing any money they have paid for the property.

Do I Have To Sign A Deed Of Covenant?

Whilst you do not have to sign a deed of covenant, it usually means you will not be able to buy the leasehold property that you are interested in.

You can ask the Freeholder to change the terms of the deed of covenant to suit you better, but in most cases they are unlikely to do this, so you will either have to sign the deed, or find another property.

If you have any questions about a deed of covenant, you should speak with one of our specialist solicitors now.

Call us on 0845 1391399 or complete a Free Online Enquiry ».

 

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