EAA Publications
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| The Freshman |
Content
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| Flat owners are bound by
the Deed of Mutual Covenant |
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Among the various documents
affecting the title of property, the Deed of Mutual Covenant
is most relevant to the rights and obligations of individual
flat owners, as can be illustrated by the case below.
Mr Sze owned a residential unit. Recently, through an estate
agent, he rented the unit to a tenant who used the flat to store
goods and as a showroom.
As goods were constantly being moved in and out, in the course
of time it was no secret that the unit had been put to uses
other than residential. One day, Mr Sze received a notice from
the management office asking him to stop using the flat as a
warehouse. Mr Sze intended to discuss the matter with the tenant
but the tenant ignored him, always saying that he was busy.
A month later Mr Sze received a letter from the lawyer acting
for the management company, demanding that he immediately stop
using the flat for non-residential purposes. Fearing more trouble
to ensue, Mr Sze simply had the flat listed for sale at a low
price subject to the lease. Finally, he signed a provisional
agreement of sale and purchase with a purchaser.
Selling the flat proved not to be a solution to the problem.
The management company had already filed a suit with the court
and had the writ registered at the Land Registry. The purchaser
terminated the agreement because of the writ. Mr Sze had to
return the deposit and pay the agent's commission. As the problem
was getting serious, Mr Sze sought out the tenant and finally
had to pay him a sum of money in compensation before recovering
the flat. In the mean time, other costs were incurred by Mr
Sze for the lawsuit and for discharging the registered writ.
In the Deed of Mutual Covenant of the building where Mr Sze's
flat was located, it was clearly provided that the flats should
not be used for purposes other than residential. Further, where
any tenant should violate the provisions of the Deed of Mutual
Covenant, Mr Sze as owner would have to bear responsibility,
and the management company had the right to sue him and could
have a court document or order registered at the Land Registry.
In such circumstances, the title of the flat would be adversely
affected.
A Deed of Mutual Covenant is a contract usually made between
the developer, the management company and the first purchaser
at the time the building was ready to be occupied. It provides
for the number of undivided shares allotted to each flat in
the building, the rights reserved by the developer, the powers
and duties of the management company, and the mutual rights
and obligations of the individual flat owners. It is also binding
on anyone who becomes a flat owner of the building in future.
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