Why you may need a Certificate of Compliance

Purchasing a leasehold property can involve procedures that are unknown to the Buyer. One of these procedures is the requirement for a Certificate of Compliance. Sometimes the Freehold owner of the property will place a restriction on the Leasehold title. A Certificate of Compliance is needed by the Land Registry as proof that the Buyer has complied with the necessary requirements stated in the Lease, so that the restriction can be taken off the Leasehold title. Without the removal of the restriction, the Buyer cannot register their interest in the property and obtain their Leasehold title.

A Certificate of Compliance is usually issued by the Freehold owner or by a Management Company or Management Agent on behalf of the Freehold owner. However, a Certificate of Compliance will not be issued if a Deed of Covenant has not been signed by the Buyer and witnessed.

A Deed of Covenant is a legally binding agreement that states that the Buyer promises (covenants) to comply with the requirements of the Lease and perform their obligation under it. This is a document that needs to be signed by the Buyer and witnessed by an independent person (an individual not related to the Buyer by blood or marriage). Additionally, the Buyer will usually have to pay a fee with the Deed of Covenant to the Landlord or the Management Company/Managing Agent.

Another requirement that may need to be adhered to before a Certificate of Compliance can be issued is a Notice to Assign. This is an official document that notifies the Landlord that the lease has been transferred to a new Tenant. It will state in the Lease whether this document is required. There is usually a fee that needs to be paid to the Landlord with this document.

It is the task of the Buyer’s solicitor to draft the Deed of Covenant and the Notice to Assign.

Please feel free to contact our Property Department with any questions regarding the requirements for obtaining a Leasehold property.

 

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