When Keeping It Simple Isn't That Simple - Overage Agreements In Property Transactions: A Quick Guide To "What, Why, When And How?"

Jane Bowden, Partner in our Real Estate team, discusses how an Overage Agreement is a useful mechanism for you to buy and sell while factoring in future changes in the market, protecting sellers ahead of a likely rise in market value and providing opportunities for buyers to reduce their risk.

What is Overage?

In simple terms Overage, or as it is sometimes called a "clawback", an "uplift" or an "anti-embarrassment" payment is an additional sum of money that may be paid to the Seller of land over and above the money received on completion of that sale.  Sounds good?...read on.

There are various types of Overage arrangements. For example, it could apply where the land is sold on by the initial buyer within a specified period of time for a profit; where planning permission – or an enhanced planning permission – for development is obtained in the future; or where the sale price has been calculated (in part) by reference to the value of anticipated sales receipts