What is a Deed of Covenant? When You Need One and What It Does

What is a Deed of Covenant?

A deed of covenant is a formal legal document in which one party makes a binding promise, a covenant, to another party. In the context of residential property in England and Wales, deeds of covenant are most commonly encountered in leasehold transactions, where a buyer of a leasehold flat or house promises the freeholder or management company to observe and perform the obligations set out in the lease.

A deed is more formal than a simple contract: it must be signed in the presence of a witness (or executed by a company using its company seal or by two directors), and it is legally binding even without consideration (payment) in return for the promise.

Why are Deeds of Covenant Used in Leasehold Transactions?

Under English property law, the benefit of a covenant (the right to enforce it) can pass to successors in title more easily than the burden (the obligation to comply with it). Historically, the burden of positive covenants, obligations to do something, such as maintaining a shared roof or contributing to service charges, did not automatically bind future owners of freehold land.

Leasehold provides a mechanism to make covenants bind successive owners, because the lease itself runs with the land. However, when a leasehold property is sold, the freeholder or management company often requires the new buyer to enter into a fresh deed of covenant directly with them, reconfirming their personal obligation to observe the terms of the lease.

When is a Deed of Covenant Required?

Your solicitor will identify whether a deed of covenant is required by reviewing the lease and any requirements imposed by the freeholder or management company. Most management companies and freeholders have standard form deeds that must be used.

What Does a Deed of Covenant Contain?

A standard deed of covenant for a leasehold flat will typically include:

• **Observation and performance covenant**, the buyer promises to observe and perform all the lessee's obligations in the lease going forward
• **Indemnity covenant**, the buyer agrees to indemnify the seller against any future breach of the lease obligations
• **Management company acknowledgement**, sometimes the management company countersigns to acknowledge receipt

The deed does not replace the lease, it supplements it by creating a direct contractual relationship between the new owner and the relevant parties.

Restrictive Covenants on Freehold Land

Separately from leasehold deeds of covenant, freehold properties can be subject to restrictive covenants, obligations not to do something with the land (for example, not to build without consent, not to use the property for commercial purposes, or not to erect fences above a certain height). These are registered at HM Land Registry in the Charges Register of the title and bind successive owners.

Restrictive covenants on freehold land can be discharged or modified by application to the Upper Tribunal (Lands Chamber) under section 84 of the Law of Property Act 1925, if the covenant has become obsolete or impedes reasonable use without practical benefit to those entitled to enforce it.

Checking for Covenants Before You Buy

Before exchanging contracts, your solicitor will obtain the official copies of the title register from HM Land Registry, which record any restrictive covenants in the Charges Register. For leasehold properties, the lease itself should be reviewed in full. Property Passport UK displays HM Land Registry title information for registered properties, giving buyers an early indication of any noted covenants before formal conveyancing begins.