Parkinson Real Estate recently negotiated a 40% reduction in an overage agreement (also known as a clawback) for a client based on a residential development site in Greater Manchester. Read on to find out how we accomplished this money saving agreement.
What is an overage clause?
An overage clause, also known as a clawback, is an agreement entered into between a seller and a buyer during the sale of an interest in land or property. An overage typically obliges the buyer to pay more money, usually a percentage of the increase in value, to the seller on the satisfaction of certain conditions. These are often referred to as trigger points.
The certain condition in this particular instance was the change of planning use for the site. The specific trigger point was the granting of planning consent that changed the permitted use of the site from medical to residential. In this case, the former land owner was NHS Property Services.
The Issue
Our client purchased a former medical site from NHS Property Services that was subject to a site overage. They proceeded to acquire planning consent for the demolition of the existing infrastructure to develop family housing on the site. However, the NHS wouldn’t allow the removal of the restrictive covenant that was needed for the development to commence before an agreement was reached to satisfy the overage covenant.
The Solution
Our local knowledge of the area was paramount. We undertook detailed analysis of comparable evidence in our data bank, which effectively enabled us to oppose the evidence provided by the former land owner’s surveyor. We valued the site, reported to the client (providing our commercially minded advice), and were successful in reducing the site overage payment.
The Result
We successfully negotiated a 40% reduction in the site overage figure requested by the former land owner, NHS Property Services. Our client was delighted with this result. Not least because they now have the ability to commence development without the added cost and delay of a third-party determination.
Parkinson Real Estate gets property
Parkinson Real Estate is a leading multi-faceted group of property related businesses that span both commercial and residential sectors. We provide a wide range of services on both a regional and national level to property owners, occupiers, investors, developers and professionals within the property sphere.
With more than 25 years of first-class industry experience to our name, we are committed to providing the most professional, efficient, discreet advice and solutions for all things property. Our team of chartered surveyors and support staff have a vast amount of knowledge and can tailor a solution to your needs.
For more information about our services, please contact us on 0161 930 8499 for our Manchester office, 01772 876456 for our Preston office, or 01942 741800 for our Wigan office. Alternatively, email us at info@parkinsonre.com. Our knowledgeable team will be only too happy to help with your query.
