Housing Act 1988

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

F1 Sch. 11 para. 2(3) repealed (13.10.2003) by Land Registration Act 2002 (c. 9), ss. 135, 136(2), Sch. 13 (with s. 129); S.I. 2003/1725, art. 2(1)

F2 Sch. 11 para. 2(5)(e) substituted (22.9.2008) by Housing and Regeneration Act 2008 (c. 17), ss. 307(6), 325