Deed of Covenant Subletting

paduk

Hello,

2 years ago the Borough where the flat I let is located required for properties located on certain roads to apply for a property licensing certificate.
I did it and a couple of weeks ago I received the certificate. So far so good.

Today I have received another letter from the freeholder saying that the council has informed them that I have applied for this license and they are requesting for my tenants to enter into a Deed of Covenant with them.

The flat has been let to the same person since 2012 (when I bought it) and at that time I sent an email to the Management Company (appointed by the Freeholder) stating that I was letting my flat to such and such person as instructed to do by my solicitor.

It seems that the Borough has informed the Freeholder of a situation they were not aware of and now they are asking me and my tenant to comply with the Lease and charging me £300 for the privilege. In theory I have no issue paying for it if this is what is requested however I have a problem with asking to my tenant to sign up a document with the Freeholder.

The Leases states " Not to underlet the whole of the demised Premises unless covenants and obligations similar in all respects to those herein contained (except as the amount of the rent) on the part of the Lessee are entered into by the sub-lessee with and for the benefit of the Lessor and other flat owners".

I cannot understand if they can enforce me to ask my tenant to sign this deed on this base? and generally what these type of Deeds consist of?

Any thoughts on this much appreciated.

Thanks a lot.

Comms69

You didnt get consent from the freeholder?

princeofpounds

Your lease basically states that you (the lessee) are required to commit your tenant (the sub-lessee) to meet the terms of your lease, in a manner that is enforceable to the freeholder (the lessor).

For whatever reason, this was not enforced when you originally started the tenancy despite your notification to the freeholder.

A deed of covenant is a legal contract that will enable this clause to be satisfied; your tenant will sign up to those terms just as you have.

The basic idea here is that if your tenant breaks the lease terms, there isn't much the freeholder can do about it directly, as they have no legal relationship. 

It's unlikely there is anything too contentious in the lease, but obviously your tenant is going to wonder where this has all popped up from.

greatcrested

Your lease has various clauses within it and imposes vaious obligations on you, the lessee. Examples might be not to keep pets, not to make noise after 10 pm that disturb other leaseholders, etc.

If you breach these, the freeholder can enforce those terms against you.

Your tenancy agreement with your tenant also has various clauses - but these might be completely different, and might not include the same obligations on the tenant.

The freeholder, having no legal relationship with your tenant, cannot enforce anything on ypur tenant.

By signing the Deed with the freeholder, your tenant ecomes bound by the same lease terms as you are (thus protecting other flat owners from noise after 10 pm, dogs etc).

It's a reasonable demand, and should in my view be automatic in the letting of all leasehold proerties, thought the fee should be reasonable.

Should have been done in 2012, but hey! things get overlooked.

The problem now is that your tenant might refuse to sign, and there's little you can do to force them other than..... evict if they don't (which would anyway currently take you 9 - 12+ months....).

Hopefully you have a good relationship with your tenant, can explain the problem and the rationale, and all will be well.

paduk

greatcrested said:

Your lease has various clauses within it and imposes vaious obligations on you, the lessee. Examples might be not to keep pets, not to make noise after 10 pm that disturb other leaseholders, etc.

If you breach these, the freeholder can enforce those terms against you.

Your tenancy agreement with your tenant also has various clauses - but these might be completely different, and might not include the same obligations on the tenant.

The freeholder, having no legal relationship with your tenant, cannot enforce anything on ypur tenant.

By signing the Deed with the freeholder, your tenant ecomes bound by the same lease terms as you are (thus protecting other flat owners from noise after 10 pm, dogs etc).

It's a reasonable demand, and should in my view be automatic in the letting of all leasehold proerties, thought the fee should be reasonable.

Should have been done in 2012, but hey! things get overlooked.

The problem now is that your tenant might refuse to sign, and there's little you can do to force them other than..... evict if they don't (which would anyway currently take you 9 - 12+ months....).

Hopefully you have a good relationship with your tenant, can explain the problem and the rationale, and all will be well.

I know and I am so angry for having trusted my solicitor I should have checked it myself! I told her I would let the property and to check what it was needed in order to do so. She said to send an email to the management company to inform them of tenant moving in which I did but she never mentioned to me that I had to receive a written consent from the Freeholder and ask my tenant to sign this deed of covenant. What a mess! I have a very good relationship with my tenant, she has been living there for 8 years and I think we are very happy with each other so I hope she will be ok with that.

Comms69

Your solicitor is unlikely to specialise in tenancy law. You should be angry at yourself for starting a business without doing the necessary research. 

paduk

Comms69 said:

Your solicitor is unlikely to specialise in tenancy law. You should be angry at yourself for starting a business without doing the necessary research. 

"Unlikely"...Well she is (or was) given that she retired and that's the reason why I appointed her to do the checks which cost me a fair amount of extra money.

Comms69

paduk said:

Comms69 said:

Your solicitor is unlikely to specialise in tenancy law. You should be angry at yourself for starting a business without doing the necessary research. 

"Unlikely"...Well she is (or was) given that she retired and that's the reason why I appointed her to do the checks which cost me a fair amount of extra money.

In that case you should seek redress from the firm / the SRA. In either case, the onus is still on you.

princeofpounds

She would have shown you the lease agreement and asked you to read it. It was in there, and so technically the information was there. Although I get your frustration when your question wasn't answered properly verbally.

eddddy

paduk said:

The Leases states " Not to underlet the whole of the demised Premises unless covenants and obligations similar in all respects to those herein contained (except as the amount of the rent) on the part of the Lessee are entered into by the sub-lessee with and for the benefit of the Lessor and other flat owners".

I gather that this can kind of clause can cause some major problems for landlords...

• It's fine for covenants like not keeping pets, not storing things in communal areas, not playing loud music, etc.

• But there are probably also covenants to pay the service charge, redecorate the flat every 7 years, etc.

• So if the leaseholder fails to pay the service charge, the freeholder can take legal action to claim the service charge from the tenant.

And so no tenant (who understood what they were signing) would sign a deed potentially making them liable for service charges (for example, if the lifts need refurbishing, or the cladding needs to be replaced).