Conditional land sale contracts: When can a buyer terminate and lose their deposit?

Conditional contracts are common in property development, particularly where a purchaser is required to obtain planning permission before completing a transaction.

The recent decision in Whitburn Estates Ltd v Thirteen Homes Ltd and another [2026] EWHC 1256 (Ch), the High Court considered whether a purchaser could validly terminate a conditional land sale contract after missing a planning application deadline, and whether the seller was entitled to retain the £245,000 deposit.

The decision highlights the importance of clear contractual drafting, compliance with deadlines and understanding the consequences of terminating a contract while in breach.

The facts: A missed planning deadline

On 28 January 2022, Thirteen Homes Ltd (Thirteen) entered into a conditional contract with Whitburn Estates Ltd (WEL) to purchase development land at Mill Lane, Whitburn, for £2.45 million. Thirteen paid a £245,000 deposit, held by solicitors.

The contract required Thirteen to submit a planning application within six months of exchange, by 28 October 2022, and to use “all reasonable endeavours” to obtain satisfactory planning permission.

Thirteen failed to submit its planning application by the deadline. It argued that the outstanding covenant and ongoing negotiations with British Coal had hindered progress, and that WEL should have allowed additional time or taken steps to secure the covenant’s release.

Why did the buyer miss the deadline?

Thirteen argued that the outstanding restrictive covenant prevented progress and that additional time should have been granted while discussions with British Coal continued.

High Court ruling: No excuse for non-compliance

The court held that Thirteen had failed to comply with its express obligation to submit the planning application within the contractual period.

The outstanding restrictive covenant did not excuse that failure. The contract contained detailed provisions governing planning obligations and extensions of time, but no equivalent obligation requiring either party to secure the covenant’s release.

The court declined to imply a term that would effectively make the planning deadline dependent on resolving the covenant issue. Such a term would alter the parties’ agreed allocation of responsibilities rather than make the contract workable.

Assessing the buyer’s ‘reasonable endeavours’

The court also considered Thirteen’s efforts to obtain the covenant’s release. Applying the principles in IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335, it found that Thirteen had not taken the steps expected of a prudent purchaser acting to achieve the desired outcome. Its limited communications with British Coal and failure to offer the requested professional fees undermined its position.

WEL was therefore entitled to retain the full £245,000 deposit.

Key lessons for developers and landowners

Before entering into a conditional land sale contract, parties should carry out thorough due diligence on the property to identify restrictions, title issues and other matters that may affect the proposed development or the ability to satisfy the contract’s conditions.

That due diligence should inform the timescales agreed for each condition, allowing realistic time for planning applications, third-party consents and the release of restrictive covenants where required.

Taking legal advice before signing can help parties agree workable deadlines, appropriate extension provisions and clear consequences if a condition is not satisfied. Identifying potential obstacles at the outset is preferable to relying on informal discussions or assumptions once contractual deadlines are running.

Get in touch with our team of Commercial Property experts for advice and guidance.