Section 106 - Proof of payment essential?

VICTORSEVEN

Hi All,


I've been reading the forum for months and it's helped massively to read about others experiences and expert advice.


I'm buying a detached house on a development built in 1997 and myself and the vendor agreed to a fast exchange of contracts when the offer was accepted (6 weeks ago). A coupe of weeks ago it seemed that we were about to exchange, everything lined up on my side, contract signed, deposit in client account etc.


My solicitor is saying there is one final enquiry that must be answered, which is that all monies due from the developer to the council under the Section 106 agreement have been paid. My solicitor is requesting/demanding evidence of this so it can be placed with the deeds before proceeding and is insistent on this.


I think this is holding things up, we got a pack from the council detailing the non-financial elements of the 106, that took two weeks, I don't want to wait weeks more if it can be avoided.
1. Is it a genuine 'must have' when purchasing to require proof of payment?
2. Is it common or realistic to say that the council, after 17 years would persue the current owners of the properties on the development for money the developer agreed to pay?
3. Am I crazy for telling the solicitor to get on and exchange without this proof?


I'm keen to secure the property!


Hope you can help sense check, many thanks.


Christian

princeofpounds

The problem is that without the Section 106 bribe the conditions of the planning permission will not have been met.

I am not sure where liability would rest after a property transaction, but you don't want to permission to be faulty.

Annie1960

Is this a situation where an indemnity policy would help?

Gwhiz

princeofpounds wrote: »

The problem is that without the Section 106 bribe the conditions of the planning permission will not have been met.

I am not sure where liability would rest after a property transaction, but you don't want to permission to be faulty.

Are you sure about that?

My planning permission and 106 agreement were totally separate. There were no conditions on the permission relating to the 106 payment.

The 106 is all about the granting of permission, not about conditions.

Freecall

Gwhiz wrote: »

There were no conditions on the permission relating to the 106 payment.

That is very unusual. S106 agreements are unilateral but in order to be effective need to be tied to the planning consent.

Gwhiz

Freecall wrote: »

That is very unusual. S106 agreements are unilateral but in order to be effective need to be tied to the planning consent.

Interesting. I completed my self build in April and have had no request from the council for payment of the agreed 106. I've just emailed my architect to see what's happened with regard to this!

princeofpounds

Are you sure about that?

My planning permission and 106 agreement were totally separate. There were no conditions on the permission relating to the 106 payment.

The 106 is all about the granting of permission, not about conditions.

Honestly, no, not 100% sure. Thought I was, but you might be right on closer inspection.

Below is what the LGA says, seems the obligation does pass along with the property unfortuately.

A planning obligation can be subject to conditions, it can specify restrictions definitely or indefinitely, and in terms of payments the timing of these can be specified in the obligation.

If the s106 is not complied with, it is enforceable against the person that entered into the obligation and any subsequent owner. The s106 can be enforced by injunction.

In case of a breach of the obligation the authority can take direct action and recover expenses.

The planning obligation is a formal document, a deed, which states that it is an obligation for planning purposes, identifies the relevant land, the person entering the obligation and their interest and the relevant local authority that would enforce the obligation. The obligation can be a unitary obligation or multi party agreement.

The obligation becomes a land charge.

VICTORSEVEN

I had a chat with the Duty Planning Officer this morning.

He said from a planning office point of view they would have no power to enforce breach of planning action on a current property title owner as it is well beyond 4 years, set out in Section 171 of the 1990 T&C Planning Act.

He also said that the planning office wouldn't pursue issues of non-payment, that would be for their legal team to decide if they wanted to peruse monies.

His steer was that it would actually be quite hard to track down records from that long ago and getting the authority to confirm receipt of payment from the developer would be tough or impossible depending on the state of authority records.

princeofpounds - that text is very useful, do you have a URL for where you found it please?

It seems to support the solicitors view, I guess I may have to make a call as to whether enforcement is a real risk or not after 17 years.

I have found no reference to issues where homeowners were pursued for monies the developer owed, has anyone else?