Restrictive Covenants for free-hold property

geek1981

Hi guys

I'm purchasing a freehold new build from TW and found there is a clause of restriction on the title deed - "5.7 RESTRICTION – no disposition of the registered estate (other than a charge) by the proprietor of the registered estate is to be registered without a certificate signed by XYZ Property Management Ltd .. that provisions of Clause 5 of this transfer have been compiled with.”

Basically this clause requires me to get permission from the estate management company whenever i remortgage or sell my property which will have some costs involved and add some delay. I asked people who lived there and apparently they had to pay this Mgmnt company whenever they remortgage their property even if it is freehold! Is this common thing when you buy houses within a new estate? I haven't exchanged yet, but just wondering if you have any thoughts?

cheers!

Yorkie1

That particular clause says you need a certificate from the management company to certify that all the provisions of clause 5 have been complied with, whenever you dispose of the property OTHER THAN a charge. So, to me, when you get a mortgage - which is a registered charge on the property - that particular situation is exempt from the need to obtain a certificate.

That's not to say that there isn't a clause elsewhere relating to the mortgage situation, but on my reading of it, that clause isn't it.

geek1981

Thanks for your reply - Yes but it seems i have to pay £170 to get this certificate every time and I'm just annoyed why i need someone else's certificate to remortgage my "free-hold" property or to sell it.

ShALLaX

I often wonder if such covenants are enforceable. What's going to happen if you don't obide by said rule? Are they really going to take you to court?

geek1981

Thing is when you try to remortgage, the new lender's solicitor will ask me this certificate to process the offer. I guess that's how they enforce it. any more thoughts guys?

cheers!

geek1981

Any more advise on this experts? My solicitor checked with TW and they said this condition cannot be removed. It doesn't mention the costs involved in future , also doesn't say if i need this when i remortgage. Bit worrying!

cheers.

kingstreet

geek1981 wrote: »

Thanks for your reply - Yes but it seems i have to pay £170 to get this certificate every time and I'm just annoyed why i need someone else's certificate to remortgage my "free-hold" property or to sell it.

The previous owners appear to have misinterpreted what's been said.

you need a certificate from the management company to certify that all the provisions of clause 5 have been complied with, whenever you dispose of the property OTHER THAN a charge

This certificate is required in situations other than a charge. So remortgaging, requiring a charge, is exempt. I can see a disposal here as a sale or a transfer of equity.

Did the previous owners actually establish that this certificate was required, or did they simply read it and assume, paying as they thought they should?

Your solicitor should be establishing EXACTLY what this means to you and explaining it.

geek1981

Asked solicitor ystrdy for more info and got reply:

"With regard to the consent to sell the property from the management company this is something that your buyer will need to obtain when you sell the property and their solicitors will deal with this on their behalf. The reason this is needed is because there are covenants in the transfer document that you need to comply with and any new owners will need to comply with. It is standard in all TW’s transfers"