James Goddard, Partner, gives an example of how our Commercial Property team dealt with a recent sale of a derelict farm, despite the COVID-19 difficulties.
Our Commercial Property team acted in the purchase of a derelict farm for a client and negotiated the terms of an overage agreement. An overage agreement contains an obligation on the buyer of land to make a further payment to the seller in the future when a certain event, (usually the grant of planning permission) known as a “trigger event”, occurs.
At the time of the purchase, our client’s intention was to obtain planning permission and redevelop the site. The overage was protected by a legal charge in favour of two beneficiaries (B1 and B2).
Recently, our client obtained planning permission, which was subject to them entering into a planning (Section 106) agreement. A Section 106 agreement is an agreement drawn between a developer and the local planning authority, outlining the planning obligations that a developer must take to reduce the impact on the local community. It was a requirement of the council that the beneficiaries as the proprietors of the legal charge, entered into the Section 106 agreement.
It was not possible to get a response from B2. After months of negotiating, we agreed with the council that, without B2’s consent, the client was able to pay the planning contributions on completion of the agreement, rather than on commencement of the development.
Our client found a buyer for the site who wished to purchase it with a mortgage. It was a requirement of the buyer’s lender that the beneficiaries agreed to register the lender’s legal charge ahead of its charge. B2 remained unresponsive and attempts to visit B2 were prevented as COVID-19 lockdown restrictions were introduced.
In order to progress the sale, the parties entered into a contract that was conditional upon receipt of B2’s consent and our team instructed counsel to prepare a claim form to force B2/the court to issue the necessary consents for the sale and registration of the buyer’s charge to proceed. Once that claim form was issued, B2 responded and issued the necessary consents, meaning that we were able to complete the sale just as lockdown restrictions eased.
This case successfully demonstrates how we were able to work with our client and all parties to find creative solutions to progress and complete a sale despite difficult circumstances.