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Deed of Covenant: The Ultimate Guide

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Navigating the UK property market isn’t always easy as it can include going through legal jargon and paperwork. One of these legal documents is the “deed of covenant.” In this ultimate guide, we explain the details, its legality and why this contract is so important in property transactions.

What is a deed of covenant?

So, first of all, let’s start by explaining what a deed of covenant exactly is. In simple terms, it is an official document between two parties stating their exact rights and obligations. Frequently this is in relation to buying a leasehold property. This contract works to safeguard both parties and outlines what each party might expect from the other. For instance, it could include requirements for upkeep, insurance, and use of communal facilities in the context of leasehold buildings. Solicitors often produce the document, which you’ll need to sign and witness to make it legally binding.

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Why do you need a deed of covenant?

The contract serves to clarify roles and responsibilities. This helps cut down on future disputes by clarifying roles and obligations.

What makes it necessary?

For a number of reasons, you can need a deed of covenant:

  • Establish guidelines for maintaining the property as a landlord.
  • As a renter, ensure you’re getting the promised maintenance and services
  • To satisfy lender criteria as part of the property sale process.

What does it cover?

The contract usually spells out the commitments each party has made. Including everything from payment schedules, the upkeep of obligations and even more specific requirements like neighbourly manners.

What does a deed of covenant look like?

The format may vary, but it often includes the following:

  • The names and contact information of the parties involved.
  • The property in question.
  • Specific clauses outlining obligations and responsibilities.
  • The parties’ signatures.
  • Signatures of witnesses.

Does a deed of covenant need a witness?

Yes, a witness is usually required to make the deed legally binding.

How to arrange a deed of covenant

It normally involves the following steps:

  1. Identify if there is the need for a deed, you can consult legal advisors.
  2. Draft the document, often with the help of a solicitor.
  3. Review the deed carefully.
  4. Sign the document in the presence of a witness.
  5. Register the deed.
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Contract F&Q’s

Who pays for a deed of covenant?

The party who benefits the most from the deed often bears the cost, although this can be negotiated.

How much should a deed of covenant cost?

The cost can vary widely, as it can depend on the complexity of the document and the legal fees. Expect to pay anywhere from £100 to £500 or more.

Can you refuse to sign a deed of covenant?

While you can technically refuse to sign, doing so may have legal or financial consequences, such as a deal falling through or being in breach of another contract.

Does a the contract expire?

The terms of the deed will determine its lifespan. Some deeds are intended to last a life time, while others may have an expiration date.

How long does the contract take to produce?

The time frame can vary but generally, it takes a few weeks to draft, review, and finalize a deed of covenant.

Is a deed of covenant always needed for leasehold?

It is not always needed for leasehold, but it is common in these situations to protect the interests of both the freeholder and the leaseholder.

Do you register a deed of covenant at the Land Registry?

In some cases, yes. Particularly if the deed contains obligations that affect the land or property, then it should be registered with the Land Registry to notify future owners of these obligations.

Key differences: deed of covenant vs restrictive covenants

Both “deed of covenant” and “restrictive covenants” are legal terms commonly used in the UK property market, they serve different purposes and are used in different contexts.

Both are used to set out obligations and restrictions. A deed of covenant is generally a more flexible, bilateral agreement between specific parties, whereas restrictive covenants often are conditions that are attached to the land itself and can affect future owners.

Next steps

The buyer, after signing, usually waits for the solicitors to complete other legal formalities. This could include things like finalising the mortgage, doing last-minute checks, and making sure all other paperwork is in order. The deed of covenant can often be just one part of a larger picture. Navigating all the legal documents and requirements in the UK property market is no small task. Though it might seem complex and daunting at times, understanding certain terms will serve you well in your property search.

You are now well-equipped to make an informed decision. Make sure to always read the deed carefully and consult your solicitor for advice.


Last Updated: January 8th, 2024

Phil Spencer

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