Legal Advice for Landowners Selling Land to Developers

Even if a developer is applying pressure, you should never sign an agreement without first consulting a professional.

Your land is a valuable asset and you should seek professional help before signing any agreement. If you are being pressurised to sign something, please feel free to telephone us and we can provide immediate initial advice to you.

The heads of terms are the main terms agreed in principle between you and the developer before the preparation of the contract. They should set out all the key details relating to the amount of land being sold, the valuation method for that land and the timings for the transaction. They would normally be prepared by a land agent or surveyor.

An option agreement is an agreement between you and a developer under which the developer can purchase the property on agreed terms at any time during a specified period. Sometimes the developer will pay a fixed fee to you for entering into the opinion agreement. Under an option agreement, you have no guarantee that the land will be bought by the developer during the option period.

A conditional contract, in contrast, is a contract that is binding on both parties to sell and buy the property provided that certain conditions are satisfied. We often find with the development of property that the key condition will relate to the grant of planning consent for the proposed development. Under a conditional contract, if the conditions are satisfied, then both parties will be bound to sell and buy the property.

Many landowners are able to agree option fees; however, whether your developer pays an option fee or professional costs will depend on the terms you negotiate in your option agreement or conditional contract.

The terms might compensate you for the restriction on selling your property to any other party during the period of the option agreement and any other restrictions the developer might want to impose on what you can do with the property.

Landowners are often able to negotiate the payment of all or part of their professional costs in dealing with an option agreement or conditional contract and this would be negotiated on your behalf by your land agent or surveyor.

Myerson Solicitors have experience working with many property professionals including specialists in the sale of land which has potential for development; we are more than happy to recommend professional surveyors.

We can make recommendations to you of professionals who might be suitable, so that you can speak to them and decide whether or not you would like to ask them to act on your behalf. The decision as to who you wish to act on your behalf is entirely yours.

It is quite likely that before committing to purchasing land or incurring costs in putting forward a planning application, the developer might wish to carry out ground investigations to ensure that the land is not contaminated and to ensure that the actual land will be suitable for building. Access would normally be granted to the developer in a licence document, which would include restrictions on when the land can be accessed. It would also include obligations on the developer to make good any damage caused during the investigations.

The terms overage and clawback are used to describe the situation where land is sold by you to a developer for a fixed price, but further payments are made by the developer to you in the event that agreed conditions are satisfied at a later stage.

The most common condition for the trigger of an overage payment is the grant of a planning consent for development of the property. The use of overage allows you to sell the property for an immediate income but with the comfort of knowing that on the future grant of planning consent and development of the land a share of the enhanced value of the land will be passed back to the you. The terms relating to overage agreements can be complex and would include agreement on how to calculate any increase in value and the further payments then due during the overage period as well as how often and in what circumstances a payment will be triggered.

Restrictive covenants are legal agreements that impose limitations on how a property can be used or developed. They can impact your land by dictating things like architectural styles, land use, appearance, and maintenance standards.

These covenants are meant to maintain consistency and property values within a neighborhood or development. However, they can also restrict your freedom to use the land as you wish and are typically enforced by homeowner associations or property owners.

Myerson Solicitors act for landowners all over England and Wales and will be able to assist you no matter where you are within those countries.