Overage agreements have been in the news, with a court case
that highlights the need for clear, unambiguous definitions about
what triggers a payment.
As we explained recently, in an overage agreement
the buyer agrees to pay an extra fee, on top of the original
purchase price, if and when certain events happen. Often that event
is obtaining planning permission which increases the value of
land.
Overage agreements have become popular because a seller can look
forward to further income from their sale in the future, while a
buyer may benefit from a lower initial price, only paying more once
their purchase has gained in value.
Uncertainty can be expensive
Our earlier article emphasised how both parties need to be
absolutely clear about the agreement terms, and this has been borne
out in the recent court case between Dartford Borough Council and
Loxleigh Investments.
