Section 106 Help!

SteveB39

Hi,

We're going through the purchase process of a new build at the moment, but my solicitor has raised an issue that there is no carve out clause in the Section 106 agreement, nor is the developer providing indemnity for the Section 106 provision of community stuff, i.e. School places and leisure contribution etc). So theoretically, should the developer not fulfill their obligations the council could come after the home owners in the development in future for the cost of these.

To me this is a big risk and is making me think I should pull out of the purchase.

Has anyone else gone through this? - and if so would you share what your thoughts were and what you did?

Thanks,

Steve

ProDave

I thought S106 contributions had to be paid at the comencement of a development,. so can your solicitor check if the developer has actually paid it yet.

Otherwise is an indemnity policy available?

Check the planning application for the development to see what the S106 clause actually says.

SteveB39

Most do, but some are longer term.

Solicitor doesn't think there is an indemnity policy available, but we are exploring that.

The S106 agreement says all the community provisions and does not include the carve out clause. I've looked at the Law Society's model agreement, and its very similar to that, just with this one taken out: "This Deed shall not be enforceable against owner-occupiers or tenants of dwellings constructed pursuant to the Planning Permission nor against those deriving title from them."