Overage Convenant help please

Sallyspin

Dear all,
Many thanks to anyone who is taking the time to read this, i was about to exchange contracts on a property when it was suddenly announced by my solicitor that the additional 2 acres of land adjoining the property has an overage Convenant on the title deeds, on the deed its says the trigger is planning permission, the lady I am buying the property from had planning permission approved in July 2014 for a holiday let log cabin to be built on the land ( this has not been acted on ) , my solictor has now refused to exchange contracts until it has been clarified that no monies are due,( if you are still with me I am ever so grateful!! ) the sellers solicters and the overage agreement owners and their solicters have said no monies would be due as no development has taken place, however the trigger quite clearly states planning permission being granted. Now I have very little knowledge of any of this but as the planning permission is for a temporary structure that would be ancillary to the land surely the overage would not have been triggered and no monies would have been due. I cannot leave it to my solicitors as 2 buyers are threaten to pull out of the chain and I really need to exchange and complete by Jan 6th I really would appreciate any help or advice from anybody who has experienced this or can help me understand better.
Many many thanks

Thrugelmir

Are you purchasing with a mortgage?

Sallyspin

Hi yes I am a very small mortgage,I probably should have been clearer its 3 acres of land, a farm house, detached annex and 1 acre on one title deed and the 2 other acres with the overage clause on another title deed but they both being sold together. Thank you

daveyjp

You only have half the info. Overage may be due on planning permission, but how is it calculated?

Covering all possibilities of what pp may be granted for in an overage clause is very difficult.

Thrugelmir

Sallyspin wrote: »

Hi yes I am a very small mortgage,

The size of the mortgage is irrelevant. Your solicitor also works for the mortgage lender. Therefore has duties and responsibilities to fulfil on their behalf. Until they are satisfied that the matter is resolved. There'll be no forward movement with the transaction.

Sallyspin

Thank you for the replies, whilst I am aware the solicitor has a legal duty to my mortgage lender I have lost complete confidence in the company I am using, rather foolishly I used a conveyancing company on our estate agents promise of a smoother and less stressful transaction, yes I have had my fingers burnt, we was due to exchange contracts it's only because our file went to be reviewed and the supervisor picked up the overage Convenant, I was assured this could be resolved within a couple of days then my assigned caseworker went on leave and it has been passed to somebody else who I have had to go through the whole thing again there is very little communication between the solicters and it has become very messy, was just hoping if I could try and get a better understanding then I could contact all solicitors involved and hopefully get some movement. The overage agreement is not a deal breaker we do not want to seek further planning permission, only what has already be granted to present owner, we would just like to build the holiday let log cabin and hopefully live happily ever after with the reassurance we don't have a rather large overage bill ( it's 50% of the currant value and the uplift value) if we was to proceed. Many thanks

anselld

Sallyspin wrote: »

it's 50% of the currant value and the uplift value

Exact wording please?

Any time limit on the clause?

Sallyspin

Exact wording reads as
"further payment" a sum equal to 50% of the development value.
It has a time limit of 30 years.
it is quite a document and i am afraid i don't know how to add it to this without lots of personal information also being disclosed. sorry


anselld

Sallyspin wrote: »

Exact wording reads as
"further payment" a sum equal to 50% of the development value.
It has a time limit of 30 years.
it is quite a document and i am afraid i don't know how to add it to this without lots of personal information also being disclosed. sorry


So the "Development Value" is ...
the Value of the property with the Cabin fully built
... minus ...
the Value of the property without the Cabin or planning permission.

Could be substantial.

If it is triggered by planning approval then there is already a potential liability should the beneficiary choose to enforce it.

It may be possible to get an indemnity insurance - ask your Solicitor.

Richard_Webster

Overage covenants also have SDLT implications. A buyer of a property with such a covenant has to pay SDLT on the extra value that would be there if a permission was implemented. If it is never implemented at the end of the 30 years you can claim back the excess SDLT then!

AlexMac

Irrespective of how competent or incompetent your conveyancing solicitor is, and whether they are on duty, on holiday or at home eating turkey, they are bound by professional codes of practice and obliged to represent your interests and give you the best advice (albeit at your expense if it drags out).

So without knowing all the options, which I guess include
- your solicitor clarifying that the covenant does, as it seems, mean that money was due (to an identifiable previous owner?) at or about the time planning permission was granted;or
- your solicitor confirming that the date when any overage payment is due is negotiable; or
- that the overage is only payable when the built development actually commences; or in such case, when complete (presumably as evidenced by a building notice or similar sign-off)
- or that there is a loophole and the whole thing can be ignored; or at least put on a back burner without real threat of you having to part with cash until either the Planning Permission expires (usually 3 years?) or the covenant expires (I think you said in 30 years?)

and

- what sum of money you are talking about at today's prices for the uplifted or overage value- which presumably requires someone (the vendor?) to pay an independent Chartered Surveyor or Valuer
- whether as suggested above, an indemnity is relevant or possible; in which case what that would cost and whether it would indemnify you against the (predictable) cost of the overage itself (which seems unlikely) or simply any legal costs associated with contesting it...

I'm no more expert on any of this than you are, but surely if you
-write to your solicitor requesting precise clarification along the lines above (or your own ideas) and
- ask them if this business and delay is adding to your legal costs, and if so, by how much...

then, whether or not the solicitors even reply, you can decide whether to seek a reduction in the sale price equivalent to the overage and added fees, or plough on with the sale and accept the known or unknown future financial risk? Assuming you lender lets you.

Most legal problems related to conveyancing are fixable... at a cost. The main issue is surely at a cost to who. And of course whether you are in a hurry or prepared to sit tight and tough it out in any negotiation?

And at least if you have a paper trail you've got more evidence for a complaint against the solicitor and a subsequent referral to their professional regulator if they do let you down and you want to make an issue of it after the event. (Google complaining about your solicitor or conveyancer)

Best wishes in sorting it!