2(1)The liability that may arise under the covenant required by paragraph 1 above is a charge on the house, taking effect as if it had been created by deed expressed to be by way of legal mortgage.E+W
(2)The charge has priority immediately after any legal charge securing an amount—
(a)left outstanding by the purchaser; or
(b)advanced to him by an approved lending institution for the purpose of enabling him to acquire the interest disposed of on the first disposal; or
(c)further advanced to him by that institution;
but the housing action trust may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this paragraph to a legal charge securing an amount advanced or further advanced to the purchaser by that institution.
(3)F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)The covenant required by paragraph 1 above does not, by virtue of its binding successors in title of the purchaser, bind a person exercising rights under a charge having priority over the charge taking effect by virtue of this paragraph, or a person deriving title under him; and a provision of the conveyance, grant or assignment, or of a collateral agreement, is void in so far as it purports to authorise a forfeiture, or to impose a penalty or disability, in the event of any such person failing to comply with the covenant.
(5)The approved lending institutions for the purposes of this paragraph are—
(a)a building society;
(b)a bank;
(c)an insurance company;
(d)a friendly society; and
[F2(e)an authorised mortgage lender (within the meaning of the Housing Act 1985 (see section 622 of that Act)).]
Textual Amendments
F1Sch. 11 para. 2(3) repealed (13.10.2003) by Land Registration Act 2002 (c. 9), ss. 135, 136(2), Sch. 13 (with s. 129); S.I. 2003/1725, art. 2(1)
F2Sch. 11 para. 2(5)(e) substituted (22.9.2008) by Housing and Regeneration Act 2008 (c. 17), ss. 307(6), 325