Management Companies: Should your lease include all those covenants?

Modern developments, especially blocks of flats, almost always have a management company,
sometimes run by the landlord, sometimes by a collective of the lessees, but with one thing in common, there are pages of covenants about contributing to the maintenance of the building and its common parts.

In addition, the terms of the lease will usually insist that a restriction is noted at the Land Registry that no sale of a flat will be registered unless the new lessee enters into a deed of covenant to accept and perform all the stated obligations. This will ensure that the management company will always know who the lessees actually are.

But the Land Registry is currently consulting about whether such covenants and deeds are
actually necessary. The whole matter is already covered by section 3(2) of the Landlord and
Tenant (Covenants) Act 1995, which states that on any transfer of a lease the new lessee is
automatically bound by all the covenants as stated in the lease.

This means that solicitors really can, and should, save their clients an element of unnecessary costs dealing with pointless documentation. Indeed it is believed that, in the near future, the Land Registry will even discontinue placing the usual restriction on the title entries.

However, these provisions only apply to leasehold developments. It is much less common to find freehold developments with a management company, and in those cases there is no parallel
facility. It would always be necessary for the new owner to enter into a deed of covenant if his title documents require this.

For further advice about leases and management companies contact Candy Morris at:-
Messrs Pulham & Co
Egmere House,
Market Place,
Saxmundham,
IP17 1AG
Telephone (01728) 602084 or e-mail cm@pulham.co.uk