Deed of Covenant- Leasehold flat purchase

Consumer10

My solicitor acting on behalf of my purchase has been querying a deed of covenant with the vendor. However the other side keep saying given it’s a ‘share of freehold’ purchase of a flat it’s not required.

I’m not sure what this is but can someone advise on what this actually is and if it’s required?

NameUnavailable

Hard to say without the details but the fact you are buying a share of freehold is probably irrelevant. What has your solicitor told you? They have all the facts after all.

princeofpounds

True, this is only a partial explanation.

My guess though is that this link below explains what is being argued about:

https://www.anthonygold.co.uk/latest/blog/leasehold-flats-do-you-need-a-deed-of-covenant/

It's classic legal angels-dancing-on-the-head-of-a-pin-stuff. Your solicitor is probably right, not because anyone REALLY needs one of these, but just because the arrangements you are getting into by buying the leasehold SAY you need one, and that can matter in itself.

The vendor should just stop arguing and get it done, it's only a bit of paperwork. I would, if I was trying to sell my flat.

eddddy

Consumer10 said:

My solicitor acting on behalf of my purchase has been querying a deed of covenant with the vendor. However the other side keep saying given it’s a ‘share of freehold’ purchase of a flat it’s not required.

I’m not sure what this is but can someone advise on what this actually is and if it’s required?

Just to be clear 'share of freehold' means you are buying 2 things -

• a leasehold flat
• joint ownership of the freehold building that the flat is in (either directly or via a company)

The info you've given is a bit limited, but the following might be helpful...

• The deed of covenant in question is probably between you (as a leaseholder) and the joint freeholders. Essentially, it's a document that you sign promising to pay the service charge and ground rent, etc

• The fact that it's 'Share of freehold' shouldn't be relevant

• Some leases explicitly say that a new leaseholder must sign a deed of covenant. If the lease says this, you should definitely do it, as you would be beaching the lease if you didn't.

• Some leases don't explicitly say that a new leaseholder must sign a deed of covenant. If that's the case, some lawyers say it's best to sign one anyway, other lawyers say it's unnecessary (because all the relevant covenants are listed in the lease, and they are enforceable though the lease, so no separate deed of covenant is needed.)

So I guess the last bullet point above applies to you. 

To be clear - even if it's not required by the lease, I don't think any lawyers think there's any harm in signing the deed of covenant. They just think it's unnecessary duplication, which is a waste of time and effort. And somebody (you or the vendor) will have to pay legal fees for doing it.

So I guess it's a case of letting the lawyers argue it out. (If you're really keen to get things moving - if the issue is cost, I guess you could offer to pay the legal fees for doing the deed.) 

(Or it could be that the deed of covenant is about something else...)