Assignment is the legal jargon for the sale (by the lessee) of the rest of the term of a lease to another person. In most leasehold conveyancing transaction both sets of conveyancing lawyers will need to review the lease to understand and comply with the assignment conditions. Such conditions are used to assist with the freeholder/landlord or managing agents to keep track of who is the lessee and so be able to effectively collect ground rent and service charges. Assignment conditions often also include references to mortgages and subletting.
One of the three main types of Assignment conditions is the requirement for a Deed of Covenant :‐ The seller often has to ensure that the buyer enters into a deed of covenant with the landlord/managing agent or management company. In this way the landlord or management company has a direct contract with the buyer and prior notification of the new lessee. A Deed of Covenant is usually provided in a draft form to the purchaser’s conveyancing solicitors by the seller’s conveyancing solicitors in the course of a conveyancing transaction. The purchaser’s conveyancing solicitors will then produce the final deed to be executed by the buyer to confirm they will comply with the terms of the existing lease. Deeds of Covenant are often used in conveyancing to ensure a new purchaser agrees to pay any service charges that may be levied against a property for such things as paying for maintenance and repair of common areas.
A typical form of Deed of Covenant commonly used in leasehold conveyancing transactions is set out below:
DEED OF COVENANT
THIS DEED OF COVENANT is made the day of 2009
THE LESSOR :
THE LESSEE :
THE ASSIGNEE :
(1) This Deed is supplemental to a Lease (“the Lease”) of which details are set out in the Schedule hereto
(2) The Lease contains a covenant by the Lessee that upon any assignment thereof the Lessee will cause the Assignee to enter into a direct covenant with the Lessor to observe and perform the covenants and conditions in the Lease
(3) The term granted by the Lease is vested in the Lessee
(4) The reversion immediately expectant on determination of the term granted by the Lease is now vested in the Lessor
(5) The Lessee desires to assign all his estate and interest in the Lease to the Assignee
(6) The Assignee has agreed to enter into the covenant hereinafter contained
NOW THIS DEED WITNESSETH that
1. The Assignee HEREBY COVENANTS with the Lessor to pay the rent and the monies reserved by the Lease and to observe and perform the covenants and agreements on the part of the Lessee therein contained to the same extent as if the Lessee were the original lessee to the Lease
2. In this deed where the context so requires the masculine gender shall include the feminine and neuter genders and the singular shall include the plural and where more than one person is included in the expression “the Assignee” covenants and obligations at any time expressed to be made or assumed by such party are made and are construed to be made by all persons jointly and each of them severally
IN WITNESS whereof the Assignee has signed this instrument as his deed in the presence of the person mentioned below the day and year first before written
Lease Dated :
Made Between : (1) . . . . . . . . . . . . . and (2) . . . . . . . . . . . . .
Premises known as :
For the term of : years from
SIGNED as a DEED
by the ASSIGNEE in the presence of:- )