Overage agreement hidden from me

verytired11

You may have seen my post of last week where I said that the seller's agents were pressurising me to exchange without a final viewing and before I had sight of the final legal report.  It seemed dodgy as anything, and so my suspicions have been on high alert wondering what everyone is trying to hide. 

I think I may have now discovered what is being hidden.

I have today received the final legal report from my solicitor.  She has included a deed of covenant for me to sign.  It appears to relate to an overage agreement on the land and requires me to take over the obligations under the overage agreement.  However, it does not include the agreement itself so I can't see the terms of it.  There also seems to be a requirement on the sale for the person with the benefit of the overage agreement to sign a letter stating that either the overage payment has been made or that no payment is required.  

None of this is contained in the solicitor's report and the solicitor has not included a copy of the overage agreement in the paperwork, nor is there a copy of the letter from the original owner.  I asked her for a copy of the agreement and she resent a copy of the original transfer deed.  I asked her again for a copy of the agreement and whether we had sight of the letter from the original owner, and I am waiting for a response.

I cannot understand how on earth the solicitor has not included in her final report some advice about exactly what obligations I am being asked to take over by signing the deed.  The deed refers to additional consideration so it could amount to a huge amount of money for all I know.  My understanding is that overage agreements are triggered when the land is sold and it must clearly still be active if I am being asked to sign the covenant, so why on earth am I not being advised about whether a payment is triggered and confirmation that it has been paid if it has been triggered?  The current sellers did develop the land by converting the garage to an annexe, so there could be some payment related to that becoming due on the sale that the seller's are trying to avoid.

But the real question is, why has my solicitor not given any advice on this in her report?  Perhaps I am being overly paranoid due to the events of last week but any thoughts very welcome while I wait for my solicitor to respond.

Thrugelmir

Communication works both ways. As you say. Appears to be a degree of deception by the vendor if there's been no previous discussion of the overage clause. 

verytired11

Thrugelmir said:

Communication works both ways. As you say. Appears to be a degree of deception by the vendor if there's been no previous discussion of the overage clause. 

The problem is, even if it turns out to be something and nothing, it puts me off buying because what if there is something else that the seller is trying to hide.  The planning permission for the annexe was obtained retrospectively so the seller was clearly trying to keep the development quiet from someone at the time, and got caught out and was reported to planning.  What other dodgy things has he been up to and is he keeping quiet about?

user1977

Where did you find the solicitor? They weren't by any chance "recommended" by the EA?

verytired11

user1977 said:

Where did you find the solicitor? They weren't by any chance "recommended" by the EA?

Yep. With the benefit of hindsight.......

Countrysider

I thought overage agreements had to be included on the deeds. You can download these instantly for £3 from Land Registry and at least the existence of the overage clause will be there. It may simply say "There is an overage clause - copy filed". In which case you download the OC2 form from Land Registry and post this along with £7. That will then have the full wording of the overage clause. I did this recently and the form was returned within the week. 

Overage clause would worry me greatly. There's issues around the trigger, length, % payable, and many other such things. You can't assume the overage clause was signed off by the building of the annex, as it may require that the clause is triggered for an additional separate dwelling, which an annex arguably is not as it cannot be sold independently.   

verytired11

Countrysider said:

I thought overage agreements had to be included on the deeds. You can download these instantly for £3 from Land Registry and at least the existence of the overage clause will be there. It may simply say "There is an overage clause - copy filed". In which case you download the OC2 form from Land Registry and post this along with £7. That will then have the full wording of the overage clause. I did this recently and the form was returned within the week. 

Overage clause would worry me greatly. There's issues around the trigger, length, % payable, and many other such things. You can't assume the overage clause was signed off by the building of the annex, as it may require that the clause is triggered for an additional separate dwelling, which an annex arguably is not as it cannot be sold independently.   

Thanks, I will wait to see what my solicitor comes back with.  I assume that she has the copies already but has somehow 'forgotten' to include them in the legal bundle.  My heart is sinking as it is dawning on me that at best she is not competent and at worst, dodgy.
That's interesting what you say about the triggering of the clause.  Can it usually only be triggered once then?  But might it not be a problem if I am not intending to develop the land myself?  It seems to be something used when land is sold to developers rather than in a private sale.

Countrysider

verytired11 said:

Thanks, I will wait to see what my solicitor comes back with.  I assume that she has the copies already but has somehow 'forgotten' to include them in the legal bundle.  My heart is sinking as it is dawning on me that at best she is not competent and at worst, dodgy.

That's interesting what you say about the triggering of the clause.  Can it usually only be triggered once then?  But might it not be a problem if I am not intending to develop the land myself?  It seems to be something used when land is sold to developers rather than in a private sale.

It's usually triggered by the granting of planning permission and, often, this planning permission has to result in additional dwellings, such as a new house within the grounds or splitting the existing house into flats. It can be triggered multiple times (for each planning application) or the 'obligation' may be released after the first trigger and payment. There's a decent guide here https://www.frettens.co.uk/site/library/frettensnews/overage-provisions-on-land-solicitors-bournemouth-poole

Even if you have no intention of developing the land yourself, the existence of the overage clause will impact future saleability. It may also prove difficult getting a mortgage on the property. 

When i looked at this my situation was slightly different. The seller of the property I was interested in wanted to apply a new overage clause to the property so i researched to determine if there was a pre-existing clause that they had to honour or if this was a new restriction they themselves wanted to benefit from.  

Thrugelmir

verytired11 said:

Countrysider said:

I thought overage agreements had to be included on the deeds. You can download these instantly for £3 from Land Registry and at least the existence of the overage clause will be there. It may simply say "There is an overage clause - copy filed". In which case you download the OC2 form from Land Registry and post this along with £7. That will then have the full wording of the overage clause. I did this recently and the form was returned within the week. 

Overage clause would worry me greatly. There's issues around the trigger, length, % payable, and many other such things. You can't assume the overage clause was signed off by the building of the annex, as it may require that the clause is triggered for an additional separate dwelling, which an annex arguably is not as it cannot be sold independently.   

 My heart is sinking as it is dawning on me that at best she is not competent and at worst, dodgy.

Solicitors aren't going to risk getting struck off practicing and losing their careers unless it's worth their while.