Function of Deed of Mutual Covenant (DMC)

The Deed of Mutual Covenant (DMC) is an important instrument used in Hong Kong real estate transactions. The DMC is used to define and create the rights, obligations and relations between landlord and tenant or two parties in a real estate transaction. It serves as a contract that sets out the guiding principles and agreements between the two parties on relevant matters such as the maintenance of the property, payment of rent, and duration of the tenancy agreement.

The DMC is created when two parties – the lessor (who is the legal owner of the premises) and lessee (who is the tenant) – agree to enter into a tenancy agreement. The DMC not only serves to protect the rights and responsibilities of the landlord and tenant, but it also expands upon the terms set by law. As such, it can include provisions that go beyond the minimum requirements set by the law.

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The DMC is considered a comprehensive document and should include more than the standard provisions. It must be executed in writing and also signed by both parties. The document outlines all the provisions in detail and should include the following: duration of lease, rent, rights and obligations of both parties, maintenance procedures, subletting agreement and additional clauses that define the legal obligations, such as arrears of rent, renewal periods, termination of the contract and party responsibilities for improvements or alterations to the property.

When a DMC is executed and registered in the land registry, the DMC binds both the lessor and the tenant and can be legally enforced. The DMC is created for the purpose of protecting the interests of both parties in the agreement and serves to clarify both parties’ rights and obligations in the transaction.

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In conclusion, the Deed of Mutual Covenant is an important instrument in Hong Kong real estate transactions and plays an important role in defining the relationship between the landlord and tenant in a real estate agreement. It outlines the rights, obligations and responsibilities of both parties, and ensures that the terms of the agreement are binding and enforceable.