Buying a property often comes with responsibilities.
Putting the buyer’s obligations in writing protects everyone involved.
It ensures that you know what your requirements are. It also gives the other party protection if you break the rules.
This is what a Deed of Covenant is for.
But what exactly is a Deed of Covenant? And when is it used? Keep reading to find out.
What is a Deed of Covenant?
A ‘Deed of Covenant‘ is a legally binding agreement between two parties. It is commonly seen between a freeholder and a leaseholder in the property industry.
A freeholder often uses a Deed of Covenant to outline what a leaseholder can and cannot do in their property.
This might include requirements of the leaseholder, such as:
- Maintaining a garden
- Committing to a low level of noise
- Looking after a common area
- Refraining from keeping a pet.
There are two types of Deed of Covenant:
- A positive covenant involves activities and tasks that the leaseholder must do
- A negative covenant involves activities and tasks that the leaseholder must not do.
The leaseholder will sign the Deed of Covenant to agree to these terms. You should be accompanied by a solicitor who can oversee everything.
This ensures that everyone is well-informed about what they’re agreeing to.
Other uses of Deed of Covenant
A Deed of Covenant is also used in contexts other than between a freeholder and a leaseholder.
Preventing and preserving buildings
A Deed of Covenant can prevent land from being built upon. Or it could include stipulations about what can and cannot be developed on a specific piece of land.
This might be designed to maintain the area’s ‘look’ or ‘feel’. A developer might sign this when they purchase land.
Restrictive covenants like this are typical in listed properties or homes with historical significance. If buyers wanted to change a property or land, they would need to request permission.
Crossing properties
A Deed of Covenant is also applicable when someone needs to cross a property to reach their own.
A covenant will outline the specific details of how they can do this. This might include whether it is by foot, by car, or only at certain times of the day.
How much does a Deed of Covenant cost?
Most law companies indicate that you will pay between £200 to £350 to create a Deed of Covenant.
Your exact price will depend on the complexity of the document and the company you use.
There could also be filing fees involved. This is the process of registering the Covenant with the relevant authority. In the UK, this is typically the Land Registry.
You’ll need the support of a solicitor to create a Deed of Covenant. Their expertise and experience are invaluable.
Who pays for a Deed of Covenant?
In most cases, the person who benefits from the Deed of Covenant pays the cost.
This could be the land owner because they usually ask for specific requirements to be attached to a house or land sale.
It depends on the circumstances. Speak to a solicitor for more guidance.
Where can I find a Deed of Covenant?
A Deed of Covenant should be registered with the Land Registry when it is first created. This means that it becomes part of the title register.
If you want to find a Deed of Covenant further down the line, check the title register.
Any associated Covenants should be mentioned when buying a property or piece of land.
Can a Deed of Covenant be cancelled?
Yes, a Deed of Covenant can be cancelled. It depends on the situation.
You should contact the beneficiary of the Covenant about cancelling it. This will often be the person who sold you the land.
It could also be the freeholder of your flat. If they agree to cancel the Covenant, you should speak to a solicitor about implementing this.
Some Deeds of Covenant are only valid for a set period. This means that you could wait for it to become null and void.
Check the Land Registry documents to see if this has happened – and if not, when it will occur.
The third option is to apply to the Upper Tribunal. You will need to demonstrate that the Covenant is obsolete or unreasonable.
Explain how circumstances have changed since you (or someone else) first signed it.
Keep in mind that this final option is expensive and time-consuming. You’ll need a legal professional to support you.
And even once you get to the court hearing, there is no guarantee they will rule in your favour.
What happens if someone breaks a Deed of Covenant?
You will usually face legal action if you break a Deed of Covenant. The precise punishment may be explained in the document itself.
You will have the opportunity to defend yourself if you are summoned to a court hearing. You could explain why what you did was reasonable within the terms of your agreement.
The court can issue a permanent injunction to prevent the breach from continuing. The injunction can force you to stop this activity. You may face heavy fines or eviction if you continue.
The person that breaks the Deed of Covenant could have to remove any work they’ve done that was in breach.
For example, if you built an extension contrary to the Covenant terms, this might need to be dismantled.
Do I need to sign a Deed of Covenant?
Plenty of leases make a Deed of Covenant compulsory if you want to buy the house.
They do not have to sell to you if you are unwilling to sign it.
You could negotiate with the land owner on price due to a Covenant.
You should explain why it is an inconvenience and thus how this translates into a lower offer. But they can walk away if they please.
