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    • marlex
    • By marlex 19th May 17, 3:54 PM
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    marlex
    Restrictions/ Deed of Covenant on Property
    • #1
    • 19th May 17, 3:54 PM
    Restrictions/ Deed of Covenant on Property 19th May 17 at 3:54 PM
    Hi All
    Me and my girlfriend are finally in the process of buying our first property, yay happy days .

    The house is owned by the seller (not shared ownership), however we have recently found out that there is a deed of covenant on the property and maybe some restrictions - for which we're waiting on our solicitor to let us know more. The covenant is with Orbit and at the moment the only thing that we were told is, that in the future if we decide to sell the property we would need to offer it first back to orbit before we can sell it on the open market. We have already asked our solicitor if this condition/covenant could be removed but the answer is no due to how this property was set up.

    I just can't get my head around it why we have to continue with this covenant if we'll be the new owners of the property and the previous agreements are between the current seller and orbit.

    My questions is, can this have an effect on the value of the property in the future? Did anyone had experience with this or could give us some insight/advice on if this is a good purchase or we should pull out of the deal?

    Thanks for any help
Page 1
    • Chanes
    • By Chanes 19th May 17, 4:00 PM
    • 841 Posts
    • 522 Thanks
    Chanes
    • #2
    • 19th May 17, 4:00 PM
    • #2
    • 19th May 17, 4:00 PM
    If the price they were prepared to pay was the market value I cannot see how having to offer them first refusal is a problem? Am I missing something?
    • getmore4less
    • By getmore4less 19th May 17, 4:26 PM
    • 29,130 Posts
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    getmore4less
    • #3
    • 19th May 17, 4:26 PM
    • #3
    • 19th May 17, 4:26 PM
    The problem is who decides market value when you can't put it on the market.

    Talk to the seller about there experience they must have just gone through it.
    • Chanes
    • By Chanes 19th May 17, 4:29 PM
    • 841 Posts
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    Chanes
    • #4
    • 19th May 17, 4:29 PM
    • #4
    • 19th May 17, 4:29 PM
    The problem is who decides market value when you can't put it on the market.
    Originally posted by getmore4less
    Er...oh, never mind.
    • Hoploz
    • By Hoploz 19th May 17, 4:31 PM
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    Hoploz
    • #5
    • 19th May 17, 4:31 PM
    • #5
    • 19th May 17, 4:31 PM
    Are the current sellers aware of this?
    If so then it sounds as if Orbit (whoever they are) aren't interested.
    I would assume you'd offer them a period of exclusivity to see whether they want to buy/can find a buyer before you can take it to the open market.
    I would also assume an independent chartered surveyor would be employed to give a valuation.
    But I'm only assuming these things ... You need to ask the seller for more details.
    • Rodders3000
    • By Rodders3000 22nd May 17, 11:13 AM
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    Rodders3000
    • #6
    • 22nd May 17, 11:13 AM
    Restrictions
    • #6
    • 22nd May 17, 11:13 AM
    Hi,

    My experience of this is that the restrictions are there to protect (if there any) existing customers who are renting or on part ownership schemes from ensuring you don't turn the house into a commercial property which could effect their clients.

    I have been in a similar situation and it didn't effect me at all during resale.

    There are always loop holes and other ways to get around these problems.
    Last edited by Rodders3000; 22-05-2017 at 12:53 PM.
    • marlex
    • By marlex 18th Jun 17, 1:30 PM
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    marlex
    • #7
    • 18th Jun 17, 1:30 PM
    • #7
    • 18th Jun 17, 1:30 PM
    Thank you all for your comments. I have read through the transfers and the title register. Please see below the clauses/statements, apologies it is quite extensive . Appreciate your view on this.


    Title Register:
    Restriction - No disposition of the registered estate (other than a charge) by the proprietor of the registered estate, or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Orbit ... or their conveyancer that the provisions of clauses X and Y of the transfer dated ABC referred to in the property register have been complied with or that they do not apply to this disposition.


    Transfer ABC:
    Clause X
    1. The transferee hereby grants the transferor an option either to:
    a) purchase the property itself; or
    b) propose a nominee to purchase the property


    upon the terms set out in this clause provided that such option shall only be exercisable within twenty-one years from the date hereof and in the event that


    Either


    1.1 The transferee shall serve written notice upon the transferor that the transferee wishes to
    a) transfer the property or any part thereof; or
    b) grant a lease of the property or any part thereof for a term of more than twenty one years


    Otherwise than at a rack rent within twelve months of the date of service of such notice:


    OR


    1.2 There shall be
    a) a transfer of the freehold of the property or any part thereof; or
    b) the grant of a lease of the property or any part thereof for term of more than twenty one years otherwise than at a rack rent


    The exchange of contracts (or completion where there is no prior exchange of contracts) for which takes place either more than twelve months following service of the most recent notice by the transferee under clause 1.1 or without any prior written notice under clause 1.2 having been served


    Provided that where the property is assigned under a will or intestacy, or under section 24 or 24A of the matrimonial causes act 1973, or section 2 of the inheritance act 1975 or section 17 of the matrimonial and family proceedings act 1984...... the option in this clause 1. shall not be exercisable; and


    Provided further that where either 1.1(b) or 1.2(b) applies it shall be assumed
    a) that any option to renew or extend any such lease whether or not forming part of a series of options, is exercised, and
    b) that any option to terminate any such lease is not exercised


    1.3 The option contained in clause 1. shall be exercisable by written notice served by the transferor upon the transferee at any time within six weeks of service of the transferee's notice given as mentioned in clause 1.1 or at any time after there shall have been a transfer or lease in either of the circumstances specified in clause 1.2


    1.4 The purchase price payable by the transferor (or its nominee as applicable) shall be the open market value of the property with vacant possession assessed as at the date of the transferor's notice served in accordance with clause 1.3 in accordance with any relevant guidance notices on the valuation of land and buildings for the time being in force of the royal institution of chartered surveyors by an independent qualified valuer (acting as an expert) who is an associate or fellow of the royal institution of chartered surveyors or the incorporated society of valuers and auctioneers and whose appointment shall be agreed between the transferor (or its nominee as applicable) and the transferee or failing agreement on the application of either party by the president for the time being of the royal institution of chartered surveyors and whose decision shall be final and binding on the transferor (or its nominee as applicable) and the transferee but whose costs and expenses shall be borne by the transferor (or its nominee as applicable)


    1.5 The transferee will transfer the property with full title guarantee


    1.6 The current law society standard conditions of sale shall be deemed to be incorporated herein so far as the same are applicable to a sale by private treaty and are not varied by the provisions of this clause and in case of any variation or inconsistency the provisions of this clause shall prevail


    1.7 No deposit shall be payable to the transferor (or its nominee as applicable) on the exercise of the option


    1.8 Completion of the sale shall take place and vacant possession shall be given on a date agreed between the transferor (or its nominee as applicable) and the transferee but failing agreement on the date four weeks from the date the valuer's assessment of the market value of the property made pursuant to clause 1.4


    1.9 The provisions of section 196 of the law of property act 1925 (as amended) shall apply to all notices given pursuant to this clause


    2.0 If the transferor does not serve a notice within the six week period specified in clause 1.3 (as to which time shall be of the essence) the transferee may transfer the property or any part of thereof or grant a lease of the property or any part thereof subject to exchange of contracts (or completion where there is no prior exchange of contracts) for such transfer or lease taking place within twelve months of service of the transferee's notice pursuant to clause 1.1 thereof provided that if no exchange of contracts is effected within such twelve month period and the transferee wishes to transfer the property or any part thereof or grant a lease of the property on the terms outlined in clause 1.1 the procedure set out in this clause X shall be repeated


    Clause Y
    1. The transferee hereby covenants with the transferor not to dispose of any estate or interest in the property or any part thereof save to a person who has first:


    1.1 Given to the transferor or its successor in title then entitled to the benefit of the option contained in clause X (the grantee) a signed agreement to sell in the form annexed and


    1.2 Entered into a deed of covenant with the grantee to the like effect as this covenant
    • 00ec25
    • By 00ec25 18th Jun 17, 1:37 PM
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    00ec25
    • #8
    • 18th Jun 17, 1:37 PM
    • #8
    • 18th Jun 17, 1:37 PM
    so any offer from Orbit would have to be at market value determined by a qualified surveyor who you had to agree to appoint

    yes it is a nuisance for the remainder of the 21 year period but at the same time Orbit appear to be uninterested / unable to afford current market value anyway
    • G_M
    • By G_M 18th Jun 17, 2:15 PM
    • 40,101 Posts
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    G_M
    • #9
    • 18th Jun 17, 2:15 PM
    • #9
    • 18th Jun 17, 2:15 PM
    provided that such option shall only be exercisable within twenty-one years from the date hereof and in the event that
    What is the date of Transfer ABC?

    If you should decide tosell within 21 years of the date of transfer ABC, an RICS Valuer would determine the market value (similar to what most mortgage lenders do).
    • marlex
    • By marlex 18th Jun 17, 7:45 PM
    • 8 Posts
    • 0 Thanks
    marlex
    What is the date of Transfer ABC?

    If you should decide tosell within 21 years of the date of transfer ABC, an RICS Valuer would determine the market value (similar to what most mortgage lenders do).
    Originally posted by G_M

    It was in 2014 so it would last until 2035. It disappoints me that this is part of this property and I am a bit indecisive whether I should purchase it or pull out. Because my personal circumstances changed it's either to go ahead or go back to renting .
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