Deed ofcovenant - freehold

telltale

We are selling our house. It is a freehold property but in asmall gated close with 4 other freehold properties. As there are some sharedareas there are a number of covenants contained within the deeds of each house.E.g. to pay 1/5 of maintenance costs as required, not to store rubbish ingardens, not to add extensions without agreement from the neighbours, to keepan outside light on at all times in darkness. That sort of thing.

We are nearly ready to exchange but now our buyer'ssolicitor has said they will not exchange contracts until we have asked all ourneighbours to sign a deed of covenant which they will enter into with our newbuyer. Our solicitor says that this is basically them agreeing to adhere to thecovenants in their deeds.

Our neighbours are hesitant to sign it - they don'tunderstand why it's needed.....why aren't the covenants in everyone's deedsenough? Also one of our neighbours sold previously and didn't require all of usto sign one which makes them more unsure as to why they need to sign it.


Help! Our buyer won't exchange till all our neighbours have signed it butthey won't do it!

Is it really necessary and why?! Our solicitor says that as our buyer's lawyer has picked up on it it's necessary but I find it difficult to understand why when the properties were built 7 years ago, not one of our solicitors (there are 5 houses) said we needed to enter into a deed of covenant and again when our neighbours sold 18 months ago, the new buyer again didn't require it.

Is there a reason why our neighbours should have a legitimate issue with signing it? Will is cause problems for them?

lincroft1710

I personally would not sign a binding covenant inflicted on me by an incoming owner. Why should I (and your neighbours)?

Your purchaser sounds a right Hyacinth Bucket!

vivatifosi

lincroft1710 wrote: »

I personally would not sign a binding covenant inflicted on me by an incoming owner. Why should I (and your neighbours)?

Your purchaser sounds a right Hyacinth Bucket!

That's exactly what I thought. The covenants are already there. There is no benefit to your neighbours to sign. I wouldn't. In fact, I'd quietly be hoping that the sale falls through as they sound a nightmare to live near (sorry OP). I can imagine them now, come rain or shine, sitting on a deckchair on their drive waiting for someone's porch light to blow so they can report them.

telltale

I understand what you're saying & we would feel the same if it was one of our neighbours selling and their buyer was asking for it. We'd certainly want to know exactly what we were signing and the reasons behind it. However, our solicitor was surprised that we didn't have one in place already and originally asked if we could supply her with the original one so it could be amended with the new buyer's name. It was then it materialised that their isn't currently one. Having said that as I said before our new neighbour that moved in 18 months ago didn't ask for one. Our solicitor seems to think it's in everyone's interest to have one in place and that it protects all parties. However, the problem is that our neighbours are not party to any of this information from solicitors on what it is or why it is required....they have just been presented with this document by us and asked to sign it. I can understand why they don't want to. Surely the buyer's solicitor or ours should draft a letter to them or something so they actually know what this document is.

We are just not really sure where to go from here......we are trying to persuade our neighbours by asking for more info on exactly why it is required and have also asked for the wording to be changed so it repeats verbatim the covenants on each individual set of deeds.

So I guess our neighbours agree or they do not in which case our sale falls through and are currently good relationships with our neighbours inevitably deteriorate as a result.

The thing is if this sale falls through then if we get another buyer we may encounter the same problem & if our neighbours try to sale again their buyers might request the same.

System

It sounds like some/all of the covenants may not be enforceable unless the current occupiers are named. Especially one such as the positive covenant of paying money for maintenance. This does not run with the land so can not be enforced on anybody who was not part of the original covenant

UpToMyNeckInIt

You may find that this is required because these covenants might well dictate certain conditions on paper, but if they lack a clause on how they will be enforced in the event of a breach, they are legally flawed.

I had a similar issue purchasing a leasehold property several years ago: Usual terms in the lease, but nothing about how they were to be enforced if I were not to comply.

Saying that, it was only my lease which needed amending, I was not asking my neighbours to amend theirs, so I'm not entirely sure why the same would not apply with your potential buyer over the DoC.

One for your respective solicitors I'm afraid.

Good luck.

telltale

Thanks for you reply !!!!!!! If this is the case then that makes total sense why the deed of covenant is required & I think our neighbours will agree as it protects their interests too. I will ask our solicitors for a detailed explanation as to why it is required. Many thanks

Land_Registry

telltale - such deeds of covenant are in my experience often required in such circumstances and often the registered title will refer to this in some way either as a specific entry such as a restriction or within the terms of the Transfer deed itself which imposed the original covenants/conditions.

I suspect in this case it is the latter example simply because if there was a restriction then this would have had to be complied with each time and you and your co-owners would have known about it.

In the latter example it can be overlooked on each sale, which may or may not cause problems at a later date - as with most things everything is fine until someone does not play ball over the maintenance for example and you then find out no deeds was in place and things may then just get more complicated and bogged down.

I am sure your solicitor will be able to explain things though but the hard part is how to convince the neighbours if they were never aware either. I would always recommend everyone then looking into this but as you are selling up and moving on that is presumably something they will need to concern themselves with.

Let us know what the solicitor advises please as this is something which is often dealt with separately from the registration process so we are not always aware of outcomes etc

System

If I was a neighbour why would I sign something for a new purchaser which has financial liabilities attached to it?

Looking at the examples in the OP.

1. to pay 1/5 of maintenance costs as required - Positive covenant with financial liability

2. not to store rubbish in gardens - Restrictive covenant so will go with the land(s)

3. not to add extensions without agreement from the neighbours -Restrictive covenant so will go with the land(s)

4. to keep an outside light on at all times in darkness - Positive covenant with financial liability.

Assuming all houses have the same covenants then 2 & 3 will still be in force. However if the houses are not owned by the original purchasers then 1 & 4 will not apply to them and I can not see a situation where the current owners would want to sign up for them

princeofpounds

What !!!!!! says. That's likely to be one reason for it.

Another possible reasons is that the owners of the houses (or possible just incoming new owners) are not the actual beneficiaries of the some or all of the covenants, so even if they are there in the deeds the new owners would not be able to enforce them.

Your solicitor should be able to explain this. When everyone understands the legal basis then you might be able to have a more informed conversation with everyone.

G_M

This seems a close parallel to a problem a friend has:

Her house, along with 29 others, is in a private road owned by a Company which in turn is owned by each property owner.

The Company maintains the road, the landscaping, lighting, (even arranges roof/gutter clearance as all the houses suffer from leaks when leaves/debris build up) etc.

This is obviously financed by an annual charge on each house. Unfortunately the legal set-up is such that the requirement to pay the annual charge only applies to the original owners, not to subsequent owners. The obligation to pay was on the named original owner so was not inherited on resale.

For a period of time a professional company was employed by the road-owning company (at considerable cost) to collect the annual charge and arrange the required works. They rapidly lost all the built-up reserve funds as many owners failed to pay & the fees charged for the service exceeded the income.

Eventually several owners got together, sacked the 'professional' company and took over control. They had meetings, persuaded owners to pay the annual charge and started doing regular maintenance (at much lower costs).

But it all had to be done by goodwill, negotiation and persuasion since there was no legal action that could be taken against non-payers......