Sunday, 30 July 2017 18:15

Warning To Landlords Buying Properties Less Than 10 Years Old

Rate this item
(0 votes)
Warning To Landlords Buying Properties Less Than 10 Years Old

One of our members may need legal defence against Gosport council regarding an unpaid Section 106 agreement on a property he purchased 4 years ago. The developer was supposed to pay but since going into receivership and not paying it the council are now chasing our member for it or threatening to put a charge against the property if he does not pay about £6000 within 28 days.

Firstly, what is a Section 106?

Section 106 (S106) Agreements are legal agreements between Local Authorities and developers; these are linked to planning permissions and can also be known as planning obligations.

Section 106 agreements are drafted when it is considered that a development will have significant impacts on the local area that cannot be moderated by means of conditions attached to a planning decision.

For example, a new residential development can place extra pressure on the social, physical and economic infrastructure which already exists in a certain area. A Planning obligation will aim to balance the pressure created by the new development with improvements to the surrounding area ensuring that where possible the development would make a positive contribution to the local area and community.

What the Section 106 Agreement will cover

When a planning application is submitted to a Council, it assesses the application as to whether the development would cause a significant impact to the area and community.

The S106 will vary depending on the nature of the development and based on the needs of the District. The most common obligations include:-
• Public Open Space
• Affordable Housing
• Education
• Highways
• Town centre Improvements

Preparation of the Section 106 Agreement

The content of the S106 agreement is agreed through the consultation period of the planning application with the relevant parties and planning officer. The S106 Legal Agreement will be prepared by the council's solicitors and the applicants will be required to pay the solicitor's fees excluding VAT.

So Why Are Gosport Going After the Current Owner?

Planning obligations run with the land and so are enforceable against successors in title. If the successor in title does not wish to be responsible for fulfilling the obligations, it should negotiate an indemnity. Although the obligation runs with the land, it only binds the interest of the person entering into the agreement.

How Can You Avoid It?

If there is a S106 in place on a property you are buying, a Local Land Charge will be in place and must be registered on the planning register. As part of the conveyancing process your solicitor should identify this and if he / she is worth his fee, ought to ask for an indemnity from the seller to cover you in situations such as this.

Obviously if he/she fails to do so, you may have a claim against your solicitor, but better to be clear up front and ask about any charges and get confirmation in writing than to be victim of a claim such as this one in Gosport.

In the words of our affected member: “I used a conveyancing solicitor and it was checked and the developer made an undertaking and agreement to pay this but unfortunately in the name of the limited company which is now wound up. Not just my solicitor but 5 more in the block did the same and all missed this.
Please warn all members if buying something new or converted less than 10 years old to ask the solicitor to get a definitive answer and if the purchase is from a company to take out an insurance identity to cover themselves.
The silly thing is if one or two people refuse to pay the local authority will ask the one's who do pay to pay their share to.
In this instance, this build was finished 5 years ago and the council have only just come to us this week chasing this and also I think it's madness the local authorities pass off a building and issue a completion certificate before the 106 due monies are handed over.

 

End Notes

facebook-logoFollow us on Facebook to get news updates 'as they happen' rather than waiting for the monthly summary: www.facebook.com/pdpla

Better still, post news or comment as it happens and keep everyone one else up to date. Also, catch up on previous issues of this newsletter and a wide range of other items on our website www.pdpla.com

Content is copied from multiple sources – thanks to original authors for generating and apologies for any errors we have generated. Please let us know of any newsworthy items or areas you'd like to know more:       newsletters@pdpla.com

We use cookies to improve our website and your experience when using it. Cookies used for the site's essential operation have already been set.   See our Privacy Policy.