Drafting a contract conditional on planning
Drafting a contract conditional on planning

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Drafting a contract conditional on planning
  • Nature of the condition
  • Endeavours obligations
  • Ancillary obligations
  • Planning agreements
  • Planning gain liability
  • Challenges and extensions
  • Waiver
  • Termination

Nature of the condition

It is common for contracts for the sale of commercial property to be drafted on the basis that completion of the transaction is conditional upon one party (usually the buyer) obtaining planning permission. The sale price will usually be a figure which assumes that the property has the benefit of the planning permission for which the party is to apply. The agreement should specify who has the obligation of satisfying the condition and exactly what will be required (ie outline or full permission for a specified use or scheme). This Practice Note assumes that the buyer is under that obligation.

Contracts conditional on planning often provide that the planning permission must be 'satisfactory' to the buyer because they will not be prepared to complete the transaction if the planning permission will not permit them to carry out the development of their proposed scheme on the property. 'Satisfactory Planning Permission' is often defined as a planning permission which does not contain an 'onerous' or 'unreasonable' condition.

Some buyers include their own tailored list of unreasonable conditions. A widely drafted list of subjective conditions may give a buyer complete discretion either to accept a planning permission and trigger completion of the purchase or reject it and walk away. In such a case the buyer may have what is,