Should we accept offer to buy easement vs. compulsory purchase?

Bricks

A utility company wants to build a tunnel under our house - and have written with an offer to pay a certain amount for an "easement" which as I understand it, is us giving them the right to do that. To do this, we are asked to return a "Heads of Terms" agreement by a certain date.

The letter states that the alternative is that they will acquire the rights via a Compulsory Purchase Order. They say that we would receive a lower payment than their offer, if that is what happens.

Is this something that anyone here has dealt with? Should we be looking for specialist advice, or is this a fairly standard procedure, and one that is safe just to agree to?

Freecall

You should write to them thanking them for their offer.  Tell them that you are not sufficiently qualified to understand the legal documents that they have sent you and that before signing you need independent legal advice in order that you can fully understand the implications of what you are being asked to sign.  Ask them to cover the cost of this advice.

They should agree to pick up your reasonable costs of instructing a solicitor.  Then see what your solicitor says. 

princeofpounds

Consult a specialist solicitor. Generally, if there are good grounds for a CPO (which is not a given) then it is better to negotiate a settlement instead. You can typically negotiate a better payment, as it is less trouble for the utility than going through the courts (obtaining a CPO is fairly standard procedure but it's not a routine matter as it's quite a serious infringement of liberty). However, do not take the utility's word on either a) the timescale or b) the compensation. This is why you will need specialist advice.

davidmcn

Freecall said:

They should agree to pick up your reasonable costs of instructing a solicitor.

And a surveyor in order to advise on the price.

If you have a mortgage then your lender's consent will also (probably) be required, and they'll have costs to consider it, instruct their surveyors / solicitors, etc.

Grumpy_chap

The offer will be more generous than you would receive under CPO.

AdrianC

Are they planning on building this tunnel under JUST your house?

Are you somewhere remote? Or are you surrounded by other houses, who will also be tunnelled-under?

One thing's for sure - they're legally required under a CPO to pay you the fair open-market value of your house as if the scheme was not present, plus a sum for the hassle factor.
https://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/compulsory-purchase-orders-what-you-need-to-know/
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/571453/booklet4.pdf

Bricks

Thanks for the replies.

Yes I'm surrounded by other houses and I know that at least one of my neighbours has recieved a similar letter.

In the "Heads of Terms" document they've asked us to sign, it says that they will cover our "reasonable" legal and surveyors fees. However - that's part of the agreement we are yet to sign, so it can't cover advice as to whether or not we should agree to the Heads of Terms at all.

It also says in the Heads of Terms that they are "strictly subject to contract and are not intended to be legally binding or create a legally binding relationship between the parties". So, is there anything to be lost by signing that agreement, given that it initiates the process and seemingly would mean they have agreed to cover our costs?

davidmcn

You can always ask them for an undertaking for your costs, before you even look at the heads of terms. Which would be fair enough if you were engaging a surveyor to negotiate them on your behalf. 

Mickey666

Out of interest, how close to a property does the tunnel have to be to require an easement or CPO?  Indeed, how much of the ground below our homes do we actually own?  I thought the Crown owned most of the ground (and thus mineral rights) in the UK.
I'm thinking about schemes such as London's super-sewer or Crossrail etc.  Surely such schemes don't have to obtain permission from EVERY property above them?  

AdrianC

Mickey666 said:

Out of interest, how close to a property does the tunnel have to be to require an easement or CPO?  Indeed, how much of the ground below our homes do we actually own?  I thought the Crown owned most of the ground (and thus mineral rights) in the UK.

No, the freeholder owns the ground and mineral rights - with the exception of a handful of specific minerals (oil, gas, gold, silver) where all rights rest in the crown. Sometimes, freeholds were sold off from landed estates with mineral rights reserved by the estate.

I'm thinking about schemes such as London's super-sewer or Crossrail etc.  Surely such schemes don't have to obtain permission from EVERY property above them?  

The vast majority of central London's freeholds are owned by a small handful of large estates - so the negotiations will mainly have happened with them.

davidmcn

Mickey666 said:

Out of interest, how close to a property does the tunnel have to be to require an easement or CPO?  Indeed, how much of the ground below our homes do we actually own?  I thought the Crown owned most of the ground (and thus mineral rights) in the UK.
I'm thinking about schemes such as London's super-sewer or Crossrail etc.  Surely such schemes don't have to obtain permission from EVERY property above them?  

Something as big as Crossrail has its own Act of Parliament, so a bit different from the norm insofar as there's no argument about whether they can build it - but they still need to identify every land owner involved and negotiate compensation. In general, if you own land then you own everything all the way down and all the way up - there are statutory exemptions for a few things such as coal (or the ability of planes to trespass through your airspace...) but anything else requires your permission, or to go through a compulsory purchase process of some sort.