Deed of covenant

Many leases, especially where a residents' management companyResidents' management company (RMC)A company, usually owned by the leaseholders, that is named in the leases as responsible for managing and maintaining the building, whether or not it also owns the freehold. is a party to them, say that a buyer must sign a deed of covenant before the sale is registered. The deed makes the buyer directly bound to the company, so the company can enforce the lease against them.

What directors usually do

• Check the lease to see whether a deed of covenant is required, who it's in favour of, and whether a fee can be charged (any fee is an administration chargeAdministration chargeA charge a leaseholder pays under the lease for something specific to them, such as a consent, providing information or documents, paying late or breaching the lease, rather than for running the building. and must be reasonable).
• Sign the company's part, keep a copy with the flat's records and confirm to the buyer's conveyancer that it's done. The Land Registry often needs this confirmation to remove a restriction on the title.
• At the same time, record the new owner, their address for service and, where the lease requires it, their membership of the company.

If the deed isn't done, the sale may not register properly, and the company may find it harder to enforce the lease against the new owner.