Personal covenants in lease - deed of variation requested

Patrick_A

Hello

I am in the process of selling my flat to which i own the lease but the buyers solicitor has stated that as the covenants are described in the lease as personal and not binding should the landlord sell the freehold, he has advised the buyer and his lender not to proceed with the sale unless I procure a deed of variation from the landlord.

My solicitor does not agree with the buyers solicitor but as this is the only point holding up the sale, has relented and contacted the landlord about getting this deed of variation. He has however warned that the landlord is not obliged to agree to this. The current landlord bought the building just over a year ago.

Interestingly leases to at least 16 of the 20 flats in my block have been bought in the past 2 years (including my flat) and i understand all the leases are identical or at least very similar so I imagine either the various solicitors acting for each of the buyers have missed this point or the current buyers solicitor is wrong. Although I am unfamilar with the intricacies of conveyancing it does strike me odd that my buyers solicitor is effectively stating that none of thr flats in my building can be sold unless a deed of variation is obtained. The lease is for 950+ years.

I am very concerned about this as if I am unable to get the deed, the sale will fall through and was wondering if anyone on this forum who has experience of such matters could provide an opinion on this situation particularly what my options may be if the landlord refuses to agree to sign the deed of variation. I pay annual ground rent and service charge to the landlord.

Thanks!

Patrick_A

The below points may help add more colour

Have just been through the lease and see the landlord is defined in the lease as follows "landlord means the person for the time being entitled to the reversion immediately expectant upon the determination of the term and for the avoidance of doubt the original landlord shall fall within the expression "the landlord" only so long as the reversion remains vested in the original landlord".!

This clearly varies from the definition in the lease of the tenant and superior landlord who are defined as "including successors in title"

propertyman

They have misread it. The landlord is the person who is entitled to the property when the term comes to an end ie current and future owners

It then makes a distinction that the original landlord is only the landlord for the time up until they dispose ( disposed) of it.

The landlord is therefore still obligated to meet their covenants.

They may have the concern that the landlord is "a person" and whether that precludes others such as a company.

Its my understanding it doesnt, so at worst you might have to insure against default, or they can pull out the relevant section of Lawtel and respond to the point.

Patrick_A

Thanks very much for your response. I believe my solicitor has been arguing this very point with the buyers solicitor for a couple of weeks but in vain. They are unwilling to proceed even if indemnity insurance is taken out. Would you happen to know if there are any mechanisms for mediation between solicitors in the event that they are unable to mutually come to an understanding?

Patrick_A

Apologies but due to my lack of experience in these matters I fear my original post was inaccurate.

The buyers lawyer is in fact requesting a deed of variation due to an explicit statment in the section pertaining to the Landlords covenants which I have paraphrased below

"The original landlord hereby covenants (as a personal covenant and so that the covenant will not bind any successor to the original landlord and that while the original landlord is the landlord) with the tenant as follows:"

Would you be able to provide an opinion on whether this requires a deed of variation?

propertyman

Patrick_A wrote: »

Apologies but due to my lack of experience in these matters I fear my original post was inaccurate.

The buyers lawyer is in fact requesting a deed of variation due to an explicit statment in the section pertaining to the Landlords covenants which I have paraphrased below

"The original landlord hereby covenants (as a personal covenant and so that the covenant will not bind any successor to the original landlord and that while the original landlord is the landlord) with the tenant as follows:"

Would you be able to provide an opinion on whether this requires a deed of variation?

Depending on the covenant ,I am afraid yes you do.

The more worrying aspect is that if the other leases are similar and those covenants affect the building as a whole, that it creates broader problems.


What are the covenants

Patrick_A

They carry on for about 6 pages but relate to the following:
Quiet enjoyment
Future leases to be similar
Landlord to comply with regulations
Landlord to enforce breach of covenants
Repairs
Services in landlords discretion
Variation of services
Assignment of reversion

The last covenant actually states "to procure that on any Assignment of the reversion to this lease, the assignee of the reversion executes and delivers to the tenant a deed in which the assignee of the reversion enters into personal covenants with the tenant in thebsame terms as those undertaken by the original landlord in this clause including the covenant contained in this subclause"

propertyman

Then in that case an absolute must.

And frankly I would be banging on the door of your solicitor on the purchase insisting on the cost being paid by them.

Shocking lapse.

The last clause effectively means that in each assignment the new owner and current freeholder agree to be bound by and -perform the covenants in the lease.

Where the shocking lapse it that this is all very well until A freeholder decides to ignore their duties or a purchaser misses this and the management of the building is compromised. While there are remedies they are expensive and time consuming.

Even if it is workable it is far from satisfactory.

Patrick_A

When i bought the leasehold in march 2011' the original landlord was in fact the landlord at the time. The reversion was assigned to a new landlord in 2012. Does the fact that the deed wasnt executed, mean that the original landlord was in breach of his covenants or a lapse on the part of my solicitor? Apologies if this is a silly question or doesnt make sense.

Thanks

propertyman

The landlord should have entered into deeds with all leaseholders., or they require him to do so.

This is what I feared in the earlier post, the landlord is not now obligated under the lease to meet those obligations of the original landlord. You will have to rectify it and hope they cooperate.

The oversight as by your solicitor for not spotting this risk, as I outlined in the earlier post.

Patrick_A

I actually just got off the phone to my solicitor who emailed me the superior title for the property in which the new landlord has in fact entered into deeds with all tenants. Having said that, there is the risk that future landlords would not enter into such covenants should the current landlord fail to ensure that they do

Hypothetically, is there any reason why the current landlord would not agree to the deed of variation? I imagine the deed would just make things simpler for them if at some point they decide to assign the reversion.

Thanks!