Dig­ging into ru­ral land sales

Le­gal ad­vice on buy­ing ru­ral land

Hertfordshire Life - - CONTENTS -

In many ways, sell­ing ru­ral land is the same as for other types of land. Ide­ally the seller should con­sult an agent to ad­vise on its value and how to mar­ket it. A so­lic­i­tor will then deal with the nec­es­sary le­gal doc­u­ments to ac­tu­ally trans­fer the land. How­ever, there are var­i­ous is­sues spe­cific to ru­ral sites.

If the land is be­ing used for agri­cul­tural pur­poses and the seller re­ceives EU Ba­sic Pay­ment Scheme En­ti­tle­ments they are likely to want to sell them with the land. The sale doc­u­ments must there­fore deal with this prop­erly or the en­ti­tle­ments may not be validly trans­ferred. How­ever, if a buyer does not in­tend to use the land for agri­cul­tural pur­poses it is im­por­tant that it does not un­in­ten­tion­ally war­rant com­pli­ance with var­i­ous con­di­tions re­lat­ing to the en­ti­tle­ments that it can­not ac­tu­ally meet and re­sult in a claim by the seller against the buyer for lost pay­ments.

If the land be­ing sold is un­de­vel­oped, the seller might want to in­clude over­age, also known as ‘claw-back’, in the sale terms, to en­able it to share in any po­ten­tial in­crease in the value of the land if it is de­vel­oped in fu­ture. Over­age is notoriously com­pli­cated and needs to be drafted very care­fully to en­sure it takes ef­fect in the par­tic­u­lar cir­cum­stances the par­ties in­tend. Given the com­plex­ity, over­age can sig­nif­i­cantly de­lay ne­go­ti­a­tions and there is no guar­an­tee it will ever be­come payable. The par­ties should there­fore each take sep­a­rate in­de­pen­dent ad­vice from a land agent and a so­lic­i­tor as to whether over­age should ac­tu­ally be agreed and, if so, the spe­cific terms for it.

It is also com­mon to see ru­ral land that has de­vel­op­ment po­ten­tial dealt with by way of an op­tion agree­ment or a con­di­tional con­tract. Un­der an op­tion agree­ment, it is for the buyer to de­cide whether or not it ac­tu­ally wants to com­plete the pur­chase at some fu­ture point. Un­der a con­di­tional con­tract, the buyer is obliged to com­plete the pur­chase if spe­cific con­di­tions are met. Both op­tion and con­di­tional con­tracts usu­ally re­late to the ob­tain­ing of plan­ning per­mis­sion for de­vel­op­ment of the land.

In­creas­ingly, Long­mores deals with pro­mo­tion agree­ments for ru­ral land. This is where a ‘pro­moter’ ap­plies for plan­ning per­mis­sion for the seller’s land and then mar­kets it for sale with the ben­e­fit of that plan­ning per­mis­sion. The pro­moter will fund the costs in­volved in ob­tain­ing plan­ning per­mis­sion in re­turn for a share of the sale pro­ceeds. Un­der these agree­ments the pro­moter does not ac­tu­ally buy the land but in­stead finds a buyer. As such, pro­mo­tion agree­ments are gen­er­ally viewed as col­lab­o­ra­tive and pos­i­tive for landown­ers. N

The con­tent of this ar­ti­cle is gen­eral in­for­ma­tion only, le­gal ad­vice should al­ways be sought in re­la­tion to spe­cific cir­cum­stances.

For fur­ther in­for­ma­tion, email [email protected]­mores-so­lic­i­tors.co.uk or [email protected]­mores-so­lic­i­tors. co.uk

‘While sim­i­lar to other types of land, there are is­sues spe­cific to sell­ing ru­ral land’

ABOVE:If the land is used for agri­cul­ture and the seller re­ceives EU fund­ing, this is likely to be sold on too

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