Clawback (overage) meaning

Overage Overage (also called ‘clawback’ or ‘deferred consideration’) allows a seller to share in any later increase in the land’s value—for example once planning permission is secured or when completed units are sold—after the initial disposal. The right to overage is purely contractual, and any clause will be read narrowly against the party relying on it, so precision is vital. First, decide if overage is the right tool: your client might be better off with a conditional sale contract rather than an outright sale with an overage mechanism. Keep proportion when bargaining; overage can prolong talks and inflate costs, and you may need to manage your client’s expectations on timetable and fees. Sellers, particularly in the public sector, commonly require overage to avoid later embarrassment if the buyer develops and/or disposes of the land at a significant profit. However, from the seller’s angle, overage creates ‘trailing wires’, meaning an ongoing connection with the property and a willingness to remain involved...

Various issues can surface when land ceases to be used for agriculture, whether through disposing of it entirely out of farming or by diversifying operations within an ongoing farming business. Overage Developers (and others) continue to purchase agricultural land while holding short- or long-term aspirations of securing planning permission for residential or commercial schemes. The difference in value with, compared to without, such consent is pronounced. Accordingly, when acting for the seller, you should evaluate including an overage (sometimes referred to as ‘clawback’) arrangement in the sale contract, so the seller, or successors in title, can share in any uplift in the land’s value that arises once planning permission is granted. For further guidance, see Practice Note: Overage—advice to clients and Negotiating overage—acting for the seller—checklist. Sporting rights Agricultural land can be burdened by sporting rights (eg shooting and fishing) held by third parties, either expressly granted or acquired by long user...

Inflation calculators These tools compute indexation figures using either RPI or CPI measures as needed where appropriate. They are helpful for assessing and determining the impact of inflation on amounts such as indexed rent reviews, service charge caps, deferred consideration, clawback and overage. RPI calculator tool: RPI inflation calculator CPI calculator tool: CPI inflation calculator Note that, in September 2019, the UK Statistics Authority (UKSA) proposed bringing the CPI’s methods and data sources, including owner occupiers’ housing costs, into RPI...