Legal jargon on property title - don't understand
Discussion
I'm purchasing a property. It's an old house that sits in half an acre. I'm buying it from a builder who bought in with planning permission for 2x houses in the back garden. I'm now buying the existing house.
There's restriction in the title that I'm not fully understanding.
If someone who is fluent in legal jargon could explain if the below will cause me problems when selling, that would be great. I've removed names.
1) RESTRICTION: No disposition of the registered estate by
the proprietor of the registered estate , or by the proprietor of any
registered charge not being a charge registered before the entry of
this restriction, is to be registered without a certificate signed by
the applicant for registration or their conveyancer that the provisions
of paragraph 9 of Schedule 4 to the Transfer dated 14 September 2018
and made between name #1, name #2 and name#3 and the developer who got the planning permission have
been complied with or do not apply to the disposition.
When I queried it my solicitor told me - "When you sell the property, to overcome the restriction you will need to confirm that you purchased the property at open market value. Your buyers would need to sign a deed of covenant". Is it as easy as that? whats a deed covenant?
There's a load of other questions I need to ask my solicitor, it's just this one is bugging me.
TIA
There's restriction in the title that I'm not fully understanding.
If someone who is fluent in legal jargon could explain if the below will cause me problems when selling, that would be great. I've removed names.
1) RESTRICTION: No disposition of the registered estate by
the proprietor of the registered estate , or by the proprietor of any
registered charge not being a charge registered before the entry of
this restriction, is to be registered without a certificate signed by
the applicant for registration or their conveyancer that the provisions
of paragraph 9 of Schedule 4 to the Transfer dated 14 September 2018
and made between name #1, name #2 and name#3 and the developer who got the planning permission have
been complied with or do not apply to the disposition.
When I queried it my solicitor told me - "When you sell the property, to overcome the restriction you will need to confirm that you purchased the property at open market value. Your buyers would need to sign a deed of covenant". Is it as easy as that? whats a deed covenant?
There's a load of other questions I need to ask my solicitor, it's just this one is bugging me.
TIA
As Happy Jim says, it does sound like an overage agreement. But to be certain you need to see what paragraph 9 of Schedule 4 to the Transfer dated 14 September 2018 actually says.
However, if it is an overage agreement it also sounds as though the planning permission has already been granted in respect of the garden land, so that the agreement would have served its purpose.
In that situation it may be that the builder would agree to release your property from the agreement, so that the Restriction could be removed from your title.
A deed of covenant is basically a document containing a promise from A to B to do or not do something. It's made by deed so as to be legally binding even if there's no consideration for it.
However, if it is an overage agreement it also sounds as though the planning permission has already been granted in respect of the garden land, so that the agreement would have served its purpose.
In that situation it may be that the builder would agree to release your property from the agreement, so that the Restriction could be removed from your title.
A deed of covenant is basically a document containing a promise from A to B to do or not do something. It's made by deed so as to be legally binding even if there's no consideration for it.
I suspect that the OP may not know what an overage agreement is, and may be unfamiliar with the terms Deed and consideration, so replacing one set of technical language with another may not assist.
An overage agreement is in broad summary an agreement that may in specified circumstances require a payment to be made for land additional to the payment on an earlier dealing with that land.
A Deed is a document that sets out a promise or records a transaction and which is signed and witnessed in a particular way so that a promise need not be given in exchange for something in return (in broad summary, something of value given or promised in exchange for another promise is consideration, and that is usually required to make a promise enforceable by a court).
OP, your solicitor should explain the documents in plain language : that is part of his or her job. Also he or she is insured against getting the explanation wrong, but no one here is. As noted above, the explanation must depend on what the document you refer to actually says.
IAAL but IANYL. The above is not intended as an exhaustive explanation of contracts, Deeds, and what not.
An overage agreement is in broad summary an agreement that may in specified circumstances require a payment to be made for land additional to the payment on an earlier dealing with that land.
A Deed is a document that sets out a promise or records a transaction and which is signed and witnessed in a particular way so that a promise need not be given in exchange for something in return (in broad summary, something of value given or promised in exchange for another promise is consideration, and that is usually required to make a promise enforceable by a court).
OP, your solicitor should explain the documents in plain language : that is part of his or her job. Also he or she is insured against getting the explanation wrong, but no one here is. As noted above, the explanation must depend on what the document you refer to actually says.
IAAL but IANYL. The above is not intended as an exhaustive explanation of contracts, Deeds, and what not.
Edited by anonymous-user on Wednesday 27th February 12:41
Its fairly common for land to be sold with an overage clause - this basicly means that if there is an increase in value due to development then a proportion of the increase has to be paid to the original owner.
You need to read and understand all the documents involved and be clear about what the conditions are for you having to pay the overage (and how long it applies for)
Personally I wouldn't be prepared to buy a property with an overage.
You need to read and understand all the documents involved and be clear about what the conditions are for you having to pay the overage (and how long it applies for)
Personally I wouldn't be prepared to buy a property with an overage.
Agreed with others, highly likely to be an overage clause and the relevant part of the transfer is critical.
Things to look out for:
1. Is the overage time limited or open ended
2. Is the overage applied once only or to subsequent transfers (sales) too? For instance the standard NHS property services overage hits each transfer
3. Does the overage clause have any "carve outs" for plot transfers, (there will be other carves outs for things like sub stations and public open space)
4. [b]Has the overage been settled by the developer[\b]
If the new buyer has to covenant to observe the overage - this is unusual and implies that the overage flows to subsequent owners. You need to check whether you are liable to make a payment, or if you have to jump through hoops to demonstrate market value.
At the end of the day - it may also not be an overage, it could be related to the developer's finance as funding agreements are often secured on the land and released in stages plot by plot. Again though, its very rare for these to flow to subsequent owners.
Your solicitor needs to be providing some full advice.
If you PM me the clause in the transfer, I can look at it IANAL but a am a developers with 30 years experience on land transfers, development contracts and development finance.
Things to look out for:
1. Is the overage time limited or open ended
2. Is the overage applied once only or to subsequent transfers (sales) too? For instance the standard NHS property services overage hits each transfer
3. Does the overage clause have any "carve outs" for plot transfers, (there will be other carves outs for things like sub stations and public open space)
4. [b]Has the overage been settled by the developer[\b]
If the new buyer has to covenant to observe the overage - this is unusual and implies that the overage flows to subsequent owners. You need to check whether you are liable to make a payment, or if you have to jump through hoops to demonstrate market value.
At the end of the day - it may also not be an overage, it could be related to the developer's finance as funding agreements are often secured on the land and released in stages plot by plot. Again though, its very rare for these to flow to subsequent owners.
Your solicitor needs to be providing some full advice.
If you PM me the clause in the transfer, I can look at it IANAL but a am a developers with 30 years experience on land transfers, development contracts and development finance.
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