What Is a Deed of Covenant? | Meaning Explained and FAQs

If you’re buying or selling property in the UK, particularly leasehold, you’ve probably come across the term ‘Deed of Covenant’. But what is a deed of covenant, and what does it mean for you as a buyer or homeowner?

Top Tips for Buyers

1. Check the lease early: does it require a deed of covenant?
2. Budget for deed of covenant fees (solicitor fees, freeholder/admin charges).
3. Understand your obligations: you may be legally bound to carry out or refrain from certain activities.
4. Don’t sign one until your solicitor has reviewed the terms.

Deed of Covenant Meaning

A deed of covenant is a legally binding agreement between someone who owns or has an interest in land (usually a freeholder) and another party (often a leaseholder) who agrees to do or not do certain things related to the property.

Understanding your role in a deed of covenant is essential.

Key Terms Explained

• Freeholder: Owns the land and property outright and permanently and has the legal title.
• Leaseholder: Owns the property (not the land) the for a fixed term, and typically pays ground rent to the freeholder. If you are a homebuyer purchasing a leasehold property, you are typically the leaseholder.
• Covenanter: the party responsible for doing or not doing something, usually the buyer/leaseholder.
• Covenantee: The party who receives the covenant (e.g. a neighbour, freeholder, or management company) and has the right to enforce the covenant.

For more conveyancing definitions, see our page on Conveyancing Definitions and FAQs.

Types of Covenants

1. Restrictive Covenants

These are conditions or obligations imposed on a property to determine what a homeowner can or cannot do with their house or land. They can be quite old, or new covenants could be imposed as part of a new build property. An example is that no alterations should be carried out without consent.

They typically include negative qualifiers like “not,” “never,” or “no.”

Restrictive Covenant Example:

An agreement not to build any extensions above a certain height, so that a neighbour can maintain a particular view.

2. Positive Covenants

A positive covenant requires the landowner or leaseholder to do something, such as maintain a shared driveway.

Positive Covenant Example:

You must maintain a shared driveway with your neighbour.

What happens if I breach a deed of covenant?

If a covenant is breached, the covenantee may be ale to:

• Seek an injunction to stop the breach
• Claim damages for losses
• Enforce specific action in some cases

Under the Limitation Act 1980, the covenantee has 12 years from the date of breach to take legal action (for covenants in deeds).

What does a deed of covenant typically include?

It can include various sections and information, including:

• Property address
• Background/context of the agreement
• Detailed terms (what is required or prohibited)
• Definitions of key terms
• Execution clause – signed in the presence of a witness
• Signatures of all parties

Can freehold properties have a deed of covenant?

Yes, freehold properties can have a deed of covenant. They may be more commonly associated with leasehold properties, but both positive and negative (restrictive) covenants can be on freehold properties too.

This is particularly common on managed estates, where homeowners have an obligation to maintain properties to a certain standard. However, any kind of property may have a deed of covenant, and some date back many years. So, it’s important to check all of your documents carefully when buying a new home and ask your conveyancer to explain anything you don’t fully understand.

Why do I need a solicitor?

A solicitor can provide you with the expert advice you need, as deeds of covenant are legally binding. This includes:

• Ensuring the deed is legally valid and executed
• Helping to negotiate or remove a covenant
• Understanding your rights and how the covenant affects your property
• Explaining the deed of covenant in simple terms, removing the legal jargon