Overage meaning

Basic terms At the outset, assess whether overage suits the transaction. Your client might be better protected by agreeing a higher purchase price or by entering into a conditional contract instead. Overage provisions can be intricate and expensive to negotiate. If overage is to be applied, consider when the seller expects or hopes to receive a further payment and how the buyer could avoid activating the overage. Ensure the overage includes clear definitions of: the overage period (note that, from 6 April 2010, the rule against perpetuities does not apply to most commercial interests and, if no overage period is specified, there is a risk the arrangement could be perpetual) the property that will be subject to the overage any individual units to be sold or constructed, making clear whether parking spaces and other ancillary areas form part of a unit for the overage calculation Include a ‘good faith’ clause, as this may help if the buyer does something unexpected to...

Funder’s primary objective When a buyer takes property subject to overage and seeks finance secured on that asset, a funder will require assurance that the overage provisions do not obstruct or curtail enforcement of its security. The lender must be confident its charge constitutes sound security over the property. Property and associated rights Assess the character of the site to be charged. Where it forms part of a broader development, consider whether, on a power of sale being exercised, the property will depend on rights over adjoining land held (or to be acquired) by the buyer, such as: rights of way rights concerning service media rights of support If such rights are necessary, agree a form of deed of easement to be annexed to the charge, and allow the funder to require grant of that easement when needed. Also examine whether the seller’s chosen mechanism for securing the overage is acceptable to a funder...

Basic terms At the outset, assess whether an overage arrangement is right for the deal. Your client might be better served by agreeing a higher purchase price or entering into a conditional contract instead. Overage provisions can be intricate and costly to negotiate. If overage will apply, check that the terms reflect the buyer’s intended use of the site. the overage period (note that, from 6 April 2010, the rule against perpetuities does not apply to most commercial interests and, if no period is specified, there is a risk the agreement could be perpetual) the property that will be subject to the overage any individual units to be sold or built, making clear whether parking spaces and other ancillary areas are included within a unit for the overage calculation Include a ‘good faith’ clause, as this may help in the event of a dispute...

Bastholm and others v Peveril Securities (Dalton Park Retail) Ltd and others [2023] EWHC 438 (Ch) Background The dispute concerned a demand for overage under a Payment Deed connected to the creation of a large designer outlet and retail centre at Dalton Park, County Durham. The Deed identified the ‘Seller’ as five named individuals and set out a valuation process by expert determination, to be initiated by an application to the Royal Institution of Chartered Surveyors (RICS). In 2014, those five applied to RICS seeking the appointment of an expert to assess the value of development said to have occurred in 2002. By that time, one of the five had been adjudged bankrupt and later discharged, and his Trustee in Bankruptcy was not included in the approach to RICS. The first defendant, who owned the relevant land, contended that the application was ineffective because it was not made by the true ‘Seller’, as the bankrupt’s estate – including any choses in action – had vested in his Trustee...

In this issue: Key developments and horizon scanning Repairing obligations and dilapidations Residential tenancies Service charges Rent and rates Disputes and remedies Neighbour disputes Enfranchisement and right to manage Contractual issues Easements and covenants Property disputes in Scotland Additional Property Disputes updates LexTalk® Property Disputes: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Key developments and horizon scanning The Renters’ Rights Act 2025—SDLT The Renters’ Rights Act 2025 is intended to bring in tenant-favourable reforms, yet recent reporting has stressed that the roll-out of assured periodic tenancies may result in SDLT becoming payable on rent for some tenants in the years ahead. While these SDLT provisions are long-standing, general awareness remains limited. Andrew Kerr and Ella Perrett of Burges Salmon assess the position. See News Analysis: The Renters’ Rights Act 2025–SDLT. Repairing obligations and dilapidations ...

In this issue: Key developments and horizon scanning Disputes and remedies Trespass and adverse possession Contractual issues Additional Property Disputes updates LexTalk®Property Disputes: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Key developments and horizon scanning Key developments and horizon scanning MHCLG announces implementation timeline for Renters' Rights Act 2025 The Ministry of Housing, Communities and Local Government (MHCLG) has issued the complete implementation roadmap for the Renters’ Rights Act 2025, confirming the schedule for the most far‑reaching reform of residential tenants’ rights in a generation. The government has outlined a staged approach to roll out the reforms, starting with the repeal of Section 21 ‘no‑fault’ evictions on 1 May 2026. From that day, every new and current tenancy in England’s private rented market will switch to assured periodic tenancies, granting renters indefinite occupation and ending standard use of fixed‑term agreements. Landlords will,...

This Practice Note examines what is meant by chargeable consideration, the concept that sets the level of stamp duty land tax (SDLT) payable on a chargeable transaction. For guidance on what constitutes a chargeable transaction, consult Practice Note: Land transactions, chargeable interests and chargeable transactions. For treatment of chargeable consideration in relation to leases, see Practice Note: SDLT-common lease transactions. From 1 April 2015, SDLT no longer applies to any land transaction involving any interests in or over land in Scotland. From that date, land and buildings transaction tax (LBTT) applies to those transactions, subject to transitional provisions. Accordingly, any references in this Practice Note to ‘UK land’ or similar terms, where SDLT is in point, should be interpreted as excluding interests in or over Scottish land from 1 April 2015. For more information, refer to the LBTT subtopic. From 1 April 2018, SDLT also ceased to apply to any land transaction involving any interest in or over land in Wales. From that date, land transaction tax (LTT) applies to...

This Practice Note explores the VAT consequences of overage payments. Why is this important? In simple terms, where the underlying sale attracting the overage was taxable for VAT, the overage will itself carry VAT, ordinarily becoming chargeable only when the overage is actually paid; however, there are significant exceptions. Accordingly, sellers may encounter unforeseen liabilities, and at unexpected points in time, so sale contracts must reflect the correct VAT position. Moreover, HMRC offers no comment in guidance, and there have been instances of it misunderstanding overage arrangements, or their VAT analysis, leading it to dispute a position even where VAT has been correctly accounted for. It is therefore prudent to record, at the time, the rationale for the approach adopted, together with any professional advice obtained. What is overage? Overage refers to a scenario in which a seller—often, though not exclusively, of land—retains a right to receive from the purchaser a further amount of consideration after completion and after any initial price has been paid...

Choosing a structure Unless a single entity promotes a scheme (with or without mortgage finance), many projects proceed by way of a collaborative joint venture arrangement (often known as a ‘JV’). This remains the prevailing approach across numerous property schemes today. This Practice Note sets out the corporate and contractual JV models most frequently used to regulate collaborations between landowners, developers, funder and investors in property development. For additional guidance on choosing an appropriate structure in any particular situation, see Practice Notes: Setting up a joint venture—choice of structure and Property Joint Ventures—choosing the right structure. JV company A JV company is a separate legal person, distinct from its shareholders and directors, who—provided there is proper management and solvency—enjoy limited liability. Shareholder agreements govern the collaborative relationships between the participating shareholders. As a private document, the shareholders’ agreement is not accessible to competitors, creditors or employees...

Date [ date ] Parties [ name of Seller ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Seller) [ name of Buyer ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Buyer) 1 Definitions Within this Deed, the terms below have the following meanings: Apportioned Price • an amount derived using the formula: (A/B) x C Where: ‘A’ is the gross area in [ acres OR hectares ] of the property included in the Current Disposal ‘B’ is the gross area in [ acres OR hectares ] of the Property in its entirety ‘C’ is the Purchase Price; Base Value • (a) where the Current Disposal is solely Untriggered Property: i the Purchase...

Date [ date ] Parties [ name of Covenantor, that is the party providing the covenant ] [ of OR a company incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Covenantor) [ name of Covenantee, that is the party who benefits from the covenant ] [ of OR a company incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Covenantee) Recitals This deed is made supplemental to a deed (the Original Deed) dated [ date ], entered into between (1) the Covenantee and (2) [ name of relevant party ] (the Original Covenantor). Under clause [ number ] of the Original Deed, the Original Covenantor agreed with the Covenantee not to effect any Disposal of the Property unless it ensures that the person in whose favour the Disposal is to occur executes and delivers...

Date [ date ] Parties [ name of Buyer ] [ of OR incorporated in England and Wales (company registration number [ number ]) whose registered office is at ] [ address ] (Buyer) [ name of Seller ] [ of OR incorporated in England and Wales (company registration number [ number ]) whose registered office is at ] [ address ] (Seller) 1 Definitions For this Deed, the terms set out below shall have the meanings assigned to them: [ Affordable Housing • [ social rent, affordable rent and intermediate subsidised homes provided to persons who are unable to rent or buy dwellings generally available on the open market OR carries the meaning attributed to that expression in Annex 2 of the National Planning Policy Framework presently current ] ; ] Competent Authority • any: (a) local council, highway authority, government department or any other authority, body or individual exercising powers under statute or by...

Restriction and successor covenant How compliance with an overage deed is achieved will naturally hinge on its specific terms. Nevertheless, it is probable the overage beneficiary’s right to receive overage is safeguarded by a restriction noted on the proprietorship register, together with an obligation on any incoming purchaser to enter a positive covenant requiring them to observe and fulfil the provisions of the overage deed (a ‘successor covenant’)...