What is Deed of Assignment? I get confused with Deed of Mutual Covenant. Are they the same?
Deed of Assignment – to provide a transfer of ownership of property without title.
Deed of mutual covenant – is a house rule set before MC for a strata building.
If you have bought a strata property before, you will come across these two documents. Both of them are thick!
- Deed of assignment usually is between Banker and Purchaser.
- Deed of Mutual Covenant is Developer and Purchaser.
In simple manner, when a title is not yet ready, the dealings of property depends on contract between owner, purchaser and banker (if borrowing). This is Deed of Assignment and buying property with bank loan, the assignment will be assignor (purchaser) assigning the rights of ownership to the bank (assignee).
When a property (strata building) is under the management upkeeps, like swimming pool, the owners of parcels need to agree to the terms. This agreement is Deed of Mutual Covenant.
1. The title part, for transfer of ownership without title.
2. The management part, for maintaining the common area.
1. – transfer of ownership in circumstances where title is not yet issued by land office. This is done by having Deed of Assignment – where the rights to the ownership is now sold to the buyer in a agreed contract (sale and purchase agreement) subsequently by borrowings, the rights of the bank is by Deed of Assignment. To make it easier to understand, the SPA is about transaction, the DoA is about rights of the bank.
2. – the maintenance of the strata property. The Deed of Mutual Covenant is a piece of agreement that the buyers of strata property agree to the running of the management. This is important because the property has no title but needs management before the owners set up its own Management Committee (MC). This then gives the rights to the developer to maintain the services (e.g. cleaning of swimming pool).