Deed of covenant/ management pack

benish

I’m trying to mortgage a house I own outright (raise equity)

I own a new build house from Homegroup / persona. 

I’ve had to pay for a deed of covenant/ management pack. But Homegroup have advised it is the lender they need to enter into a deed of covenant with as it’s the lender going on the deeds with a financial charge against the house. 

The lender, YBS, have turned around and said no. So now I can’t get the mortgage. 

I’m confused. 

Has my solicitor (who have been useless beyond belief) done something in error here? I don’t understand what’s going on. 

And advice appreciated. 

Thanks 

eddddy

Do you know what the Deed of Covenant is about?

As you may know, a Covenant is an agreement to do something (or not do something). What is it that Homegroup want YBS to agree to do?

benish

eddddy said:

Do you know what the Deed of Covenant is about?

As you may know, a Covenant is an agreement to do something (or not do something). What is it that Homegroup want YBS to agree to do?

It seems to be just in relation to Homegroup needing to know that the title is changing. It’s basically only changing by having a charge inserted in it. Currently the house is in my name and fully owned by way of a cash purchase. I’m now mortgaging it to raise cash. 

This is what it says on the title register; 

12.01.2022) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate , or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Home Group Limited (Co. Regn. No. 22981R) of 2 Gosforth Park Way, Gosforth Business Park, Newcastle upon Tyne NE12 8ET or their conveyancer that the provisions of Paragraph 12.4.23 of the Transfer dated 30 September 2021 referred to in the Charges Register have been complied with.

And this is paragraph 12.4.23 from the transfer TP1 

12.4.23 not to effect a Disposal of the Property or part thereof without procuring a Deed of Covenant from such transferee or disponee to observe and perform the covenants set out in paragraphs 12.4, 12.5 and this paragraph 12.4.23 prior to completing such transfer. 

benish

Any advice from anyone please?!

Tiglet2

benish said:

It seems to be just in relation to Homegroup needing to know that the title is changing. It’s basically only changing by having a charge inserted in it. Currently the house is in my name and fully owned by way of a cash purchase. I’m now mortgaging it to raise cash. 

This is what it says on the title register; 

12.01.2022) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate , or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Home Group Limited (Co. Regn. No. 22981R) of 2 Gosforth Park Way, Gosforth Business Park, Newcastle upon Tyne NE12 8ET or their conveyancer that the provisions of Paragraph 12.4.23 of the Transfer dated 30 September 2021 referred to in the Charges Register have been complied with.

And this is paragraph 12.4.23 from the transfer TP1 

12.4.23 not to effect a Disposal of the Property or part thereof without procuring a Deed of Covenant from such transferee or disponee to observe and perform the covenants set out in paragraphs 12.4, 12.5 and this paragraph 12.4.23 prior to completing such transfer. 

Lenders don't enter into a Deed of Covenant with a freeholder/management company.  You as the owner would.

Did you sign a Deed of Covenant with the freeholder/management company when you purchased? 

The new mortgage has triggered a disposition, so although technically you are not actually selling, your new mortgage is classed as a new transfer, i.e. new sale and therefore all the management company requirements have been activated.  On a sale, the new purchaser would be expected to sign a Deed of Covenant with the management company to confirm that they are willing to observe and perform the provisions noted in the lease/TP1. 

What do the paragraphs 12.4, 12.5 of the TP1 state?

Would the management company just accept a Notice of Charge?  A Notice of Charge is merely advising the management company that there is to be a charge on the property and the name of the lender.  Since you are not actually selling, it may be that you don't need to sign another Deed of Covenant, but your solicitor should advise. 

I hope you are not using Optima Legal or Enact for the 'free legals'?

benish

Tiglet2 said:

benish said:

It seems to be just in relation to Homegroup needing to know that the title is changing. It’s basically only changing by having a charge inserted in it. Currently the house is in my name and fully owned by way of a cash purchase. I’m now mortgaging it to raise cash. 

This is what it says on the title register; 

12.01.2022) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate , or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Home Group Limited (Co. Regn. No. 22981R) of 2 Gosforth Park Way, Gosforth Business Park, Newcastle upon Tyne NE12 8ET or their conveyancer that the provisions of Paragraph 12.4.23 of the Transfer dated 30 September 2021 referred to in the Charges Register have been complied with.

And this is paragraph 12.4.23 from the transfer TP1 

12.4.23 not to effect a Disposal of the Property or part thereof without procuring a Deed of Covenant from such transferee or disponee to observe and perform the covenants set out in paragraphs 12.4, 12.5 and this paragraph 12.4.23 prior to completing such transfer. 

Lenders don't enter into a Deed of Covenant with a freeholder/management company.  You as the owner would.

Did you sign a Deed of Covenant with the freeholder/management company when you purchased? 

The new mortgage has triggered a disposition, so although technically you are not actually selling, your new mortgage is classed as a new transfer, i.e. new sale and therefore all the management company requirements have been activated.  On a sale, the new purchaser would be expected to sign a Deed of Covenant with the management company to confirm that they are willing to observe and perform the provisions noted in the lease/TP1. 

What do the paragraphs 12.4, 12.5 of the TP1 state?

Would the management company just accept a Notice of Charge?  A Notice of Charge is merely advising the management company that there is to be a charge on the property and the name of the lender.  Since you are not actually selling, it may be that you don't need to sign another Deed of Covenant, but your solicitor should advise. 

I hope you are not using Optima Legal or Enact for the 'free legals'?

Thanks for your response Tiglet2! 

12.4 and 12.5 just talk about not changing the frontage of the house, building extensions without permission, parking commercial vechicles outside, maintaining the wall/fence etc etc. all standard stuff. 

I can’t remember been asked to sign a deed of covenant. 

I just signed the TP1 that had all the covenants on, and thought it was all standard legal jargon!!

I will try talk to the builder and ask about a notice of charge! 

I’m using Gordon’s property lawyers. They got great reviews for remortgages and were fairly cheap. I guess my situation is slightly different to a remortgage though! 

Thanks
Ben