If you are buying, selling or remortgaging a property, particularly a leasehold property, you may come across the term Deed of Covenant. While it sounds complicated, it is simply a legal document that creates a formal promise between parties.
What is a Deed of Covenant?
A Deed of Covenant is a legally binding agreement in which one party agrees to comply with certain obligations. In residential conveyancing, it is most commonly used when a leasehold property changes ownership.
The incoming owner signs the deed to confirm that they will comply with the terms of the lease, including obligations such as paying service charges, contributing towards maintenance costs and adhering to any restrictions affecting the property.
When is a Deed of Covenant Required?
A Deed of Covenant is often required when purchasing:
- Leasehold flats
- Leasehold houses
- Properties on managed estates
- Shared ownership properties
The lease or transfer document will set out whether a Deed of Covenant is needed. In many cases, the landlord or management company will require it before recognising the new owner.
Why Is It Important?
The Deed of Covenant provides reassurance to landlords and management companies that the new owner will honour the obligations relating to the property. Without it, the transfer of ownership may be delayed and the landlord may refuse to register the new owner.
Your conveyancer will usually prepare or arrange the deed as part of the transaction and ensure it is completed at the appropriate stage.
Are There Any Costs Involved?
Many landlords and management companies charge an administration fee for reviewing and registering a Deed of Covenant. These fees vary and are usually payable by the buyer.
How Can We Help?
If you are buying or selling a leasehold property, our experienced conveyancing team can advise whether a Deed of Covenant is required and guide you through the process. We will liaise with landlords and management companies on your behalf to help ensure your transaction progresses as smoothly as possible.
For expert conveyancing advice, contact the BHW Conveyancing team today.
The content of our site is provided for general information purposes only and does not constitute legal or other professional advice.
