When buying or selling a leasehold property, you may hear the term Deed of Covenant mentioned by solicitors or managing agents. While it can sound technical, understanding what a Deed of Covenant is – and why it matters – can help avoid delays and confusion during a property transaction.
A Deed of Covenant is a legally binding document in which a buyer formally agrees to comply with the terms of an existing lease. These terms usually relate to obligations such as paying ground rent and service charges, following building regulations, and respecting any restrictions set out in the lease. In simple terms, it confirms that the new owner agrees to “step into the shoes” of the previous owner.
When Is a Deed of Covenant Required?
Deeds of Covenant are most commonly required when purchasing leasehold flats, although some freehold houses on managed estates may also require one. The requirement is typically written into the lease or transfer document, meaning it is not optional. If a Deed of Covenant is needed, the buyer’s solicitor will arrange for it to be completed as part of the conveyancing process.
Why is it Important?
Without a completed Deed of Covenant, the landlord or management company may refuse to recognise the new owner. This can cause issues such as delays in registering ownership, problems accessing communal areas, or even difficulties when selling the property in the future. In many cases, completion of the property purchase cannot take place until the Deed of Covenant has been signed.
Are There Any Costs Involved?
Yes, there is usually a fee charged by the freeholder or managing agent for processing the Deed of Covenant. This fee varies and is typically paid by the buyer. It’s important to factor this into your overall moving costs to avoid surprises later on.
How Adam Hayes Estate Agents Can Help
At Adam Hayes Estate Agents, we work closely with solicitors, buyers, and sellers to ensure everyone understands what is required at each stage of the transaction. If a Deed of Covenant is needed, we help flag this early on, reducing the risk of last-minute delays.
Buying or selling a leasehold property doesn’t have to be complicated. With the right guidance and clear communication, documents like Deeds of Covenant can be handled smoothly – helping your move progress with confidence.
If you have questions about leasehold properties or the buying and selling process, the team at Adam Hayes Estate Agents is always here to help.
