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What is a Deed of Variation

21/11/2019
In the property sector, a Deed of Variation - or variation deed - is a standard document used to vary the terms of a lease (leasehold agreement), as agreed by the relevant freeholder and leaseholder/s and sometimes other parties, such as lenders. Deeds of Variation have an entirely separate meaning in the context of Wills, something which this article doesn't address.

Deeds of Variation are commonly used to extend a lease under the The Leasehold Reform, Housing and Urban Development Act 1993. This is, however, a very large topic on its own and interested parties should click on the above link to find out more.

They are also used to change or remove some restriction on a leasehold title; for example, leaseholders are often either forbidden from or restricted regarding keeping pets in their flatsThe leaseholder can apply to their landlord to remove or lessen this restriction and the variation deed provides a legal framework to record the particular changes both parties have agreed.

There are a large number of uses to which a variation deed can be put for a leaseholder when crafted by a specialist conveyancing solicitor.

Restrictions found during leasehold conveyancing: remedy via variation deed

When you buy a leasehold property, your conveyancing solicitor should have the experience to spot any lease defects such as restrictive covenants when examining the title and, if found, should then raise further enquiries with the the vendor's side as part of the legal enquiries stage .

They should bring all related information they uncover to your attention before you exchange contracts and, depending on the restriction involved, they might be able to remedy them at the time before exchange using a variation deed.


This article examines:





    1

    Why would you get your lease agreement varied?

Lease agreements have scope for any number of different types of restrictive covenant to be written into them by freeholders. The very nature of a restrictive covenant means that a leaseholder is restricted or forbidden from doing some action or enjoying some activity.

As stated, a leaseholder can, assuming the freeholder agrees, get their lease changed via a Deed of Variation, which is a document which literally acts to vary the lease legally, such that the leaseholder can now do whatever was previously restricted in some measure, as dictated by the freeholder and subject to any new limits that the freeholder might choose to impose.

Here's a few (but by no means exhaustive number of) examples of restrictions which a Deed of Variation can address:
  • 1. The keeping of pets
  • A typical clause which restricts the keeping of pets might be worded  like this:

    "Not to keep any bird dog or other animal in the Demised Premises without the previous consent in writing of the Lessor…such consent to be revocable by notice in writing at any time on complaint of any nuisance or annoyance being caused to any owner tenant or occupier of any other flat in the building."

    What if the lease doesn't refer to pets at all?
    In legal terms this is referred to as the lease being 'silent' on pets. In this situation, if a freeholder discovers you have pets and wants to stop this, they may seek to rely on a general nuisance clause and argue that pets aren't allowed in a building. However the freeholder may struggle to get support from the court unless they can produce actual decisive evidence of nuisance being caused.

  • 2. Alterations to the building, whether internal or external
  • Some leases can be surprisingly strict about disallowing any alterations to the fabric of a leasehold. One real-life example of this in a lease reads:

    "Not to make or permit or suffer to be made any alteration in the construction or the arrangement of the demised premises nor to cut or alter or injure any of the walls, timbers, ceilings, floors doors or windows thereof."

  • 3. Using the leasehold as a business premises
  • Many lease contracts specifically disallow you from using the premises to conduct business. This is an actual example of such a restriction:

    "Not to carry on or permit upon the demised premises or any part thereof any trade business or occupation whatsoever nor to do or suffer to be done thereon any other thing which may be or become a nuisance, annoyance or inconvenience to the Lessor or to the owners lessees or occupiers of other parts of the Building or the Property or whereby any insurance effected by the Lessor under these presents may be rendered void or voidable or whereby the rate of premium may be increased."

  • 4. The right to sublet the whole premises
  • There are many examples of leasehold contracts which forbid or restrict subletting. In all Help to Buy (whether leasehold or freehold) and Shared Ownership contracts, the default position is to forbid subletting in all situations: it would be very rare that either Homes England or a Housing Association would consider varying this restrictive covenant.

    The wording of such a restriction can be something like the following real-life example:

    "Not to assign sublet or otherwise part with possession of any part or parts (as opposed to the whole) of the demised premises and not without first obtaining the written consent of the Lessor (such consent not to be unreasonably withheld) to assign sublet or part with the possession of the whole of the demised premises (otherwise than by way of mortgage or charge) and will pay to the Lessor on demand its legal charges incurred in or in connection with the application for and the giving of such consent."

  • 5. Attaching aerials, telecommunications equipment or advertising to external walls or fixtures
  • There might be wording in the contract like this:

    "Not to affix any radio or television aerial placard announcement advertisement fascia board or sign upon the external walls or in or on windows or doors of the demised premises or expose to view any such decal name or sign."

  • 6. Access to a garage
  • 7. Access to roof or loft space
  • 8. The right to sublet roof space (e.g. for leasing to a solar panel company)
As also indicated, Deeds of Variation are also used to lease extensions and for varying ground rent charges and/or other charges written into a lease agreement.

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    2

    Who needs to be involved in a Deed of Variation?

The leaseholder/s wanting to vary the terms in a lease and the freeholder would always be involved and named in a variation deed.

Additionally there might be third parties if the subject of the variation concerned them. Typically this would be the case if there was a mortgage involved because a variation might require lender consent.

    3

    Which party has to pay for a Deed of Variation?

The leaseholder side would pay for a Deed of Variation because it is they who wish to instigate a change; this means that they also have to pay any reasonable costs that the freeholder incurs, which is always the case with a lease extension.

    4

    If you get a leasehold restriction varied does this automatically benefit all/any other leaseholders in the same block?

No. When one specific lease is varied it doesn't have any automatic effect on any other leaseholders in the same block. 

For example let's say one leaseholder has been granted rights to use loft space by the freeholder via a variation deed; the leaseholder next door doesn't also get that right.

However once the freeholder agrees a change for the one flat, they might reasonable expect to be asked by another leaseholder in the same block to allow a similar change. 

It would always be solely down to the freeholder whether to grant the request.

    5

    Do you need to register a variation deed with the Land Registry?

Yes you do because varying the terms of an individual lease is a legal matter which must be recorded officially and the associated documents accessible to interested parties.

A mortgage lender considering a remortgage or a buyer's solicitor, for example, would want to inspect your lease agreement and they would naturally want to know if any of its terms and conditions had changed since it was originally issued.

    6

    Where can you get a Deed of Variation? How much do they cost?

Our experienced solicitors can conduct all the legal work you'll need as a leaseholder for creating a Deed of Variation, including communicating with your freeholder (and lender, if applicable) right through to completion.

They can also carry this service out as part of an ongoing wider leasehold purchase conveyancing transaction as a result of them finding a restrictive covenant in the lease contract and bringing this to your attention.

Understandably deeds of variation fees depend on the exact nature of what the deed addresses, however our prices are always competitive but our client care is always of the highest standard.


Related Articles
Leasehold
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Property Covenants: Restrictive Covenants
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