Q&As

In relation to an overage agreement executed as a deed, is there any legal requirement that they need to be exchanged pursuant to a Law Society Formulae in the same way that a contract for the sale of property would be (or, indeed exchanged personally etc.)?

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Published on LexisPSL on 22/12/2020

The following Property Q&A provides comprehensive and up to date legal information covering:

  • In relation to an overage agreement executed as a deed, is there any legal requirement that they need to be exchanged pursuant to a Law Society Formulae in the same way that a contract for the sale of property would be (or, indeed exchanged personally etc.)?
  • Overage
  • Exchanging contracts
  • See the following:

In relation to an overage agreement executed as a deed, is there any legal requirement that they need to be exchanged pursuant to a Law Society Formulae in the same way that a contract for the sale of property would be (or, indeed exchanged personally etc.)?

Overage

Overage is a seller’s right to recover additional payment(s) from a buyer at some point in the future, usually after completion of a sale. Often this right is triggered by the occurrence of an event which increases the value of the land (eg the grant of planning or completion of development). These contractual obligations are often contained in a separate deed.

Overage is essentially a contractual obligation or positive covenant to make a further payment and therefore issues arise concerning:

  1. binding the buyer's successors in title

  2. protecting the seller in the event that the buyer fails to comply with its obligations

In most cases the seller will employ some sort of mechanism to protect its entitlement to overage, for example a legal charge or a restrictive covenant. See: Overage—overview.

Exchanging contracts

There is no general legal requirement for a contract to be exchanged. However, if the parties sign one document then the contract becomes effective when the last party signs (Smith v Mansi). To control when the contract comes into force the system of exchanging identical documents in counterpart has been created.

It is

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