We are able to advise whether you are a Developer or a Land Owner. Overage is a complex area of work in which Ellis Jones’ Commercial Property team have the ability to help you understand Overage and help you achieve what you want from your deal.
What is Overage?
Overage is a further payment made by the Developer to the Land Owner.
It enables the Land Owner to share in the profit of the Developer. For example:
A Developer agrees to buy the Land from the Land Owner for £250,000
The Developer agrees that if the Land can be developed for more than 2 houses then the Land Owner will be paid an additional amount over the £250,00
The Overage can be a fixed sum or can be a percentage of the Developer’s profits.
The Overage will be detailed in the Transfer Deed between the Land Owner and the Developer. The Overage will then be registered with the Land Registry.
The Land Owner will usually insist that the Overage is also protected at the Land Registry by what is known as a Restriction. This means the Developer cannot sell the Land on without the Land Owner being aware.
The Overage is normally for a fixed period of time and covers a limited number of developments of the Land
When the Overage period is finished the Land Owner should cancel the Restriction at the Land Registry
Areas of concern with Overage
Whether you are a Land Owner or a Developer it is vital that you take Legal Advice about what the Overage means to you and in drafting the Deed.
Overage is a very technical part of Land Law and drafting the Deed needs professional care and attention.
Overage can have tax implications to the Land Owner and Stamp Duty Land Tax implications to the Developer
Ellis Jones’s Commercial Property Team will to work with you to ensure that you are fully aware of what the Option means and that there are no hidden surprises.
For all of your commercial property needs please contact:
Charminster: 01202 636227
Canford Cliffs: 01202 709898
or email: commprop@ellisjones.co.uk
