Overage clause

mary

An overage clause has been triggered by Planning Permission for change of use on part of a property from horticultural to commercial use.

My question is, am I entitled (as a beneficiary) to a proportion of the increase in value of the land (from horticultural to commercial) only?

or

Am I entitled to a proportion of the new business being developed by the new owners of the property as well?

martinsurrey

mary wrote: »

An overage clause has been triggered by Planning Permission for change of use on part of a property from horticultural to commercial use.

My question is, am I entitled (as a beneficiary) to a proportion of the increase in value of the land (from horticultural to commercial) only?

or

Am I entitled to a proportion of the new business being developed by the new owners of the property as well?

that is what the overage clause will tell you...?

davidmcn

You're entitled to whatever the overage clause says you're entitled to. It's unlikely that anything additional would be implied.

Rain_Shadow

martinsurrey wrote: »

that is what the overage clause will tell you...?

'shakes head' :rotfl:

Hoploz

Post the wording here and people will be able to interpret it for you. Pretty unlikely you'd be entitled to a share of the business!

teneighty

It is usually a proportion of the increase in the value of the land, usually 25% to 50% but I have seen them as high as 75%. But it is possible for the clause to be worded to include anything, whatever the buyer is daft enough to agree to.

G_M

Provided you are not yet at the age where the clause kicks in, you'll be able to claim 50% of the profits of the business.

(seriously - without seeing the clause not even I can interpret it for you!)

mary

It says:

1. Upon the happening of one of the events ("a Trigger Event") at any time within a period of twenty years from April 2003 and on each and every Trigger Event the Transferee or his Successors in Title will pay to the Transferor or her Personal Representatives or her or their assigns an additional sum of money ("the Additional Sum").

2. A Trigger Event shall mean
2.1 the change of use of the Property or any part of it to a use substantially different from the present use as defined in the Schedule hereto on:
2.2 the grant of a Planning Permission for a change of the use of the Property or any part of it.

3. The Additional Sum shall be calculated by reference to the increase in the value of the Property or the relevant part of it resulting from such change of use or grant of Planning Permission for such change of use and shall be 50% of such increase in value if the Trigger Event shall happen at any time within ten years of the date hereof, 45% if the Trigger Event shall occur in the eleventh year after the date hereof and so on decreasing by 5% each year.

4. The Additional Sum shall be paid
4.1 within fourteen days of the Trigger Event if it shall fall within the scope of paragraph 2.1 hereof or;
4.2 within six months of the Trigger Event if it shall fall within the scope of paragraph 2.2 hereof or if earlier within fourteen days of the date on which such Planning Permission shall be implemented.

Provided that the Transferee may postpone payment until the date upon which he shall dispose of the Property or the relevant part of it and any transfer of ownership by a Transfer, Lease for a term of e=seven years or more, Mortgage or a Court Order of the death or bankruptcy of the Buyer shall constitute a disposal for the purposes of this proviso.

5. The Transferee will not dispose of the Property unless there will be included in the instrument of disposition a covenant on the part of the person or persons in whose favour such disposition will be to pay the Additional Sum in accordance with these provisions, and such a covenant is to be included in each instrument by which the Property or any part of it will be disposed of effected within twenty years of the date hereof.

The Schedule

The present use of the Property is as to part a dwelling house with garden and outbuildings and as to the remaining part a commercial market garden and/or horticultural nursery including the sale of produce derived therefrom and any building constructed to facilitate the sale of such produce.

6. The Transferor or her Personal Representatives will within seven days of receipt thereof acknowledge in writing that she has or they have received any Additional Sum in satisfaction of these obligations.

Thanks for all your various points of view.

eddddy

Based on the formula in para 4 (assuming the contract was signed in 2003), it sounds like you are entitled to 30% of the increase in the value of the property resulting from planning consent for change of use.

The part of the agreement you posted doesn't seem to say how the change in value is to be measured...

... so I guess the sensible route would be for both parties to jointly instruct a RICS chartered surveyor to value the property, with planning consent and without planning consent.

martinsurrey

mary wrote: »

Provided that the Transferee may postpone payment until the date upon which he shall dispose of the Property or the relevant part of it and any transfer of ownership by a Transfer, Lease for a term of e=seven years or more, Mortgage or a Court Order of the death or bankruptcy of the Buyer shall constitute a disposal for the purposes of this proviso.

ouch,

they don't need to pay the overage until they dispose of it, without any increase for inflation...

you could be waiting 30 years until they die!

mary

Thanks for that. Yes the document was signed in 2003. Yes I thought it would be 30%.

What had been puzzling me was the fact that the current owners had contacted the 3 beneficiaries as they want to enter into a lease with a third party for Battery Storage and were suggesting that they would offer us a percentage of the rental they would get. This proposed lease for 30 years can be terminated with 6 months notice, so there isn't much security in it as I see it. We don't know any numbers at all but do know the name of the company they are dealing with. I wasn't sure in all honesty whether we are entitled to this anyway - as the document mentions only the increase in value (meaning from horticultural use to commercial use) not extra money from the new business venture they are starting.

I've read this one page document so many times and what it seems to me is the fact that we are only entitled to a percentage of the increase in value. The solicitor we saw this week, described this document as very "woolly" as it doesn't mention any dates as to when the value should be based on.

Unknown to us until very recently, we have discovered the new owners got planning permission in 2015 for the 24 shipping containers on site and in 2016 there was a second Planning Permission granted to increase the number up to 40.