Certificate of Compliance

A Certificate of Compliance in conveyancing terms is sometimes - but not always - one of the items you have to pay for when you buy a leasehold flat.

You'll know if you're looking at buying a flat or have bought one before that there are various additional costs involved that you don't encounter if you're buying a freehold house: this is one of these which might feature.

This article looks at Certificates of Compliance and considers:

Sometimes a freeholder places a restriction on the official copy of the register of title of a leasehold property they own held at the Land Registry and it is this restriction which a Certificate of Compliance is concerned with.

The restriction, which in theory can be wide in scope, normally needs to be 'unlocked' by the would-be buyer entering into a Deed of Covenant, which must be signed and witnessed, and which states various restrictions and conditions which the new buyer must comply with which were in the original lease.

In short, the Deed of Covenant is a signed, witnessed statement from the buyer that they will comply with the aforesaid restrictions and conditions that the previous leaseholder had agreed to having been bound by.

The Certificate itself, however, is actually issued by the landlord/management company, once they are satisfied that you and your solicitor have done all you can to abide by any conditions or restrictions or have carried out any necessary actions.

The landlord/management company issue the Certificate of Compliance to the Land Registry; this removes the restriction and the new leaseholder can then move to completion.

Certificates of Compliance, as stated, aren't always required. You will only find out if there is one involved in your leasehold purchase once your solicitor has received this information from the freeholder once the former has sent over the Leasehold Property Enquiries (LPE1) form via the otherside solicitor and received the management company's leasehold information pack .

You as the buyer have to pay the freeholder's solicitor to draft the Certificate of Compliance, with costs ranging currently from about £50 to £350 or more.

The most disagreeable part of all this if you're a prospective new leaseholder is that you won't have known about costs like this coming up at the beginning.

Having already possibly had to pay out for things like a Notice of Transfer Fee and/or a Notice of Charge Fee, you'll have to 'put to bed' the Certificate of Compliance matter by agreeing to and signing a Deed of Covenant.

Essentially this Deed of Covenant is simply a confirmation that you will accept and abide by the covenants (in simple terms restrictions on the use of the property such as a ban on the keeping of pets) contained within the lease.

These should be outlined to you by your solicitor and a copy of the lease provided for you to review. You will be asked to sign the deed in the presence of an independent witness and return this to your solicitor. The landlord/management company will charge a fee for either preparing this deed, accepting the deed or both.