The Potential Pitfalls of Overage

Overage provisions can be complicated, and the recent case of Sparks v Biden [2017] EWHC 1994 (Ch), offers some useful reminders of the potential pitfalls that can arise when drafting overage agreements and the scope of the Court’s ability to imply terms into a contract.  In this article we examine the issues that can arise and suggest some practical points for consideration when negotiating an overage agreement.

In this case, the drafting did not expressly oblige the buyer to market newly built houses for sale once the development was completed, nor was there any mechanism for the payment of overage if the houses failed to sell within an appropriate time. The parties’ intentions were assumed – including that the buyer would want to sell the houses as soon as they were completed in order to realise his investment as quickly as possible.  However, this did not happen, and the agreement did not provide for such a turn of events, leaving the seller at a disadvantage.

  1. Facts of the case
  2. Decision of the court
  3. Points for practice

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Intellectual property issues for purchasers of development sites

Authors: Rachel Montagnon, Professional Support Consultant, Laura Deacon, Of Counsel, and Joanna Silver, Senior Associate, Intellectual Property, London

A recent case reminded us that a range of IP issues can sometimes be overlooked when purchasing development sites. Some relevant questions that purchasers may not immediately consider include:

  • Does the development have a distinctive name or logo?
  • Is there a website associated with the development?
  • Are there social media accounts that specifically relate to the development?
  • Do you have permission to use the architect’s drawings to promote the development?

If any of the above apply, intellectual property issues could cause problems if not identified early on.

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Successful sub-sales – being a good middle man

Author: David Evans, Senior Associate, Real Estate, London

Negotiating the purchase of a property while simultaneously negotiating the sale of the same property can be difficult, especially where the sub-sale element is confidential. But a sub-sale can be a very attractive way to structure a transaction for a middle man. Provided substantial performance or completion of the contracts to purchase and sell the property occur more or less simultaneously, the middle man will not be liable for SDLT on the purchase (subject to satisfying the conditions in the pre-completion transactions rules) and can potentially walk away from the transaction with a profit and limited residual liability in respect of the property. It can be a useful tool for developers who are keen to develop but not hold a long-term interest in the property – a developer middle man could sub-sell property but at the same time agree with the ultimate purchaser to develop the property on their behalf. However, careful consideration should be given to how the due diligence process is managed and what is included in the sale contract.

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