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Deed of Covenant between myself and the other Co-Freeholder on purchase

I am buying a share of freehold Victorian conversion (just one other co-freeholder) and my solicitor said it would be useful to have a Deed of Covenant between myself and the other Co-Freeholder, but it's not necessary. I'll have a chat with the solicitor soon but I was wondering what this document would do. Is it the document that lays out our mutual obligations if one decided to sell, for example? What have people's experiences been with deeds of covenant between co-freeholders and is there anything I should be careful about regarding this document? Thanks!

Comments

  • eddddy
    eddddy Posts: 17,762 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 25 January 2022 at 10:55PM

    You'll jointly own a freehold property with somebody else - essentially the document will set out some 'rules' to make sure you play nicely together.

    For example,

    • If you think the roof needs repairing, but your neighbour thinks it doesn't - how do you resolve it?
    • If you want a particular builder to do the work, but your neighbour wants his brother's building firm to do the work - how do you resolve it?
    Your solicitor will probably have a template deed which addresses all kinds of potential problems that you'd never have thought of.


    But even if you think the deed is a great idea, you can't force the other co-freeholder to sign it. They might not like the idea (or just decide to stick their head in the sand).

    Even if the co-freeholder is reasonably happy with the idea, they should probably get legal advice before signing. As it's you that's requesting it, they might want you to pay their legal fees.


  • FataVerde
    FataVerde Posts: 258 Forumite
    Fifth Anniversary 100 Posts Name Dropper
    edited 26 January 2022 at 8:52PM
    eddddy said:

    You'll jointly own a freehold property with somebody else - essentially the document will set out some 'rules' to make sure you play nicely together.

    For example,

    • If you think the roof needs repairing, but your neighbour thinks it doesn't - how do you resolve it?
    • If you want a particular builder to do the work, but your neighbour wants his brother's building firm to do the work - how do you resolve it?
    Your solicitor will probably have a template deed which addresses all kinds of potential problems that you'd never have thought of.


    But even if you think the deed is a great idea, you can't force the other co-freeholder to sign it. They might not like the idea (or just decide to stick their head in the sand).

    Even if the co-freeholder is reasonably happy with the idea, they should probably get legal advice before signing. As it's you that's requesting it, they might want you to pay their legal fees.


    You explained it much better in this and other posts than my solicitor. I can see how some issues, which are covered in the lease (like repairs and management) can be enforced via the lease, but what about selling the flat: what if the co-freeholder refuses to cooperate in the transfer of the freehold? Can they?

    As part of the legal pack, for example, I received a deed of covenant between the previous owners of these flats. That covered repairs and insurance (weirdly having each flat insured separately), but also a few issues not covered in the lease: that the flats will not be sold without obtaining a similar covenant from the intended purchaser (this was clearly not done because the current owners who purchased from the original, don't have a deed of covenant) and that each shall not sell without transferring their share of the freehold.

    Also, my solicitor wants to charge an extra £240 for the deed of covenant. Is this the typical price?
  • eddddy
    eddddy Posts: 17,762 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    FataVerde said:

    ...but what about selling the flat: what if the co-freeholder refuses to cooperate in the transfer of the freehold? Can they?



    The deed probably says that they must cooperate with the transfer of the freehold.

    But there's still the question of what happens if they don't cooperate, in spite of the deed.  Does the deed provide a mechanism for transferring the freehold if the co-freeholder is uncooperative, untraceable etc?

    If the only solution is to take the co-freeholder to court, that will probably take months. Your buyer probably wouldn't wait, and would run away very fast from a flat where you have to take the co-freeholder to court to get them to do things.



    (But to be clear, the vast majority of people who are co-freeholders would probably be sensible, decent, honest people - and they would do what the deed said. It would only be a problem if you ended up with one of the small minority of people as a co-freeholder who are daft, lazy or maybe have a vendetta against you.)


  • princeofpounds
    princeofpounds Posts: 10,396 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    This is something you really should consider carefully.

    The problem with two-owner freeholds is that there is no deciding vote. So if you end up with a crank for a neighbour then it can be hard to get anything productive done.
  • FataVerde
    FataVerde Posts: 258 Forumite
    Fifth Anniversary 100 Posts Name Dropper
    edited 27 January 2022 at 6:26PM
    eddddy said:
    FataVerde said:

    ...but what about selling the flat: what if the co-freeholder refuses to cooperate in the transfer of the freehold? Can they?



    The deed probably says that they must cooperate with the transfer of the freehold.

    But there's still the question of what happens if they don't cooperate, in spite of the deed.  Does the deed provide a mechanism for transferring the freehold if the co-freeholder is uncooperative, untraceable etc?

    If the only solution is to take the co-freeholder to court, that will probably take months. Your buyer probably wouldn't wait, and would run away very fast from a flat where you have to take the co-freeholder to court to get them to do things.



    (But to be clear, the vast majority of people who are co-freeholders would probably be sensible, decent, honest people - and they would do what the deed said. It would only be a problem if you ended up with one of the small minority of people as a co-freeholder who are daft, lazy or maybe have a vendetta against you.)


    The current co-freeholder is being represented by my vendors' solicitor in the transfer of the freehold so I think I should be fine. I also had an email exchange earlier in the process to ask if they're ok with cats as a pet (turns out they have a cat). They didn't reply to my other email about the state of the house before the survey but I figured they want to stay out of the selling process. I couldn't speak to the co-freeholder in person, but I spoke to our neighbours on one of the viewings and they were adamant this is a great community and my co-freeholder is a nice person to deal with. So I'm somewhat reassured by this.

    Just trying to determine if a deed of covenant would make much of a difference. In addition to the covenant between the previous owners  (before the current ones bought), there is also a 'lease renewal' created when they bought the freehold and that states that any disagreements will be settled according to the laws of England so I guess the covenant did not provide an alternative arbiter. 

    The title register does mention some covenants involving the current vendor and co-freeholder, but I wonder if those impact me and if there is any way to get them 

    "A Transfer dated YEAR made between X and Y contains purchaser's personal

    covenants. 

    NOTE: Copy filed.

    The Transfer to the proprietor contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof."

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