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Any property lawyers out there? An unusual problem.
jeffian
Posted: 08 May 2017 22:27:53(UTC)
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As a contributor to the forum, I am the first to say "don't ask anonymous bulletin board contributors, take proper professional advice" but this is a case where legal advice has been taken and we've run up against a brick wall, so any suggestions would be welcome.

A family member lives in a village within the Green Belt. There is a field of around 2 acres between her house and the next property. The owner of the field put in an outline planning application to develop a substantial number of houses and, although this was rejected, the 2 adjoining owners were worried by the potential impact on the village and their own properties in particular, if development were ever permitted in the future. The owner of the field then put the land up for auction, with the freehold being subject to an 'overage' agreement specifying that they would be entitled to a share of the increased value if the land was ever developed in the future. My family member and the owner of the property on the other side of the field got together and bought the land in their joint names. It has been divided down the middle and each party has annexed their half to their own property as 'amenity land'. So far so good. They now wish to divide the title so that each owns the part annexed to their existing property, rather than the whole being held in joint ownership. This will also be necessary if either party wants to sell their property as they do not currently own half each, but the whole in joint ownership.

Now here's the problem. The original owners of the field, who had retained the 'overage' rights in the event of future development, have subsequently sold those rights to a third party. The division of the land and the registration of the ownership with Land Registry as two separate titles requires the agreement of the owner of the overage rights. Despite the fact that the current owners acknowledge the rights and understand that they would have to pay a proportion of the increased value if the land were ever developed, the owner of the 'overage' rights has refused to give his consent and is now not even responding to communications. The lawyers being used by my family member seem to have run out of ideas as to how to take this forward. Is there, as in leases, a concept that consent cannot be 'unreasonably withheld'? Any other ideas?
xcity
Posted: 08 May 2017 22:51:35(UTC)
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I'm very definitely not an expert,
but it seems to me that the overage rights will be worth less if the land is split because it makes development both less likely and less profitable. They may have been sold a pup. I'm not surprised that they aren't keen to agree.
It's a complicated arrangement. I don't know if it would be possible for the joint owners to assign a long lease to each portion of the land. If it's agricultural land, there may be further issues to consider. If so, a solicitor specialising in this type of land deal would be the best option. Easier to find if it is in a truly rural area rather than suburban green belt.
sandid3
Posted: 09 May 2017 04:09:32(UTC)
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Quote:
They now wish to divide the title so that each owns the part annexed to their existing property
"If wishes were horses, beggars would ride" comes to mind. It sounds like your relative intended to do this but didn't check out the legality first in the hope of blagging their way to what they wanted. It didn't work. Stop trying to game the system.
DCB
Posted: 09 May 2017 11:21:31(UTC)
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Presumably the present owners , who purchased the property subject to the overage clause , were advised by their solicitor of the implications.
Fully understand the owner of the overage clause will not allow changes.
The owners could try to buy-out the overage. The value will clearly depend on the chances of PP being acheived.
jeffian
Posted: 09 May 2017 12:26:04(UTC)
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It was probably a mistake to raise this on a public forum. All the responses so far miss the point. If there is an actual property lawyer out there (not a barrack-room one!), I'd be interested.
Alan Selwood
Posted: 09 May 2017 15:10:29(UTC)
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jeffian,

I too am not a property lawyer, but it's still an interesting case to raise on the forum!

My first reaction was to wonder whether the two joint owners had any legal basis for dividing up the land and 'annexing it to their garden...' since the purchase at auction may have been done as a joint tenancy rather than tenancy-in-common. By dividing the land up and separating it into 2 parts, they have possibly raised issues such as depriving each other of the use of one half of the whole, jointly-owned field. Also, unless each owner has full rights of access to both halves, there might be problems later through one of them asserting that under 'squatter's rights' they have acquired full usage rights to 'their half' to the exclusion of the other! There are also tricky CGT implications in some cases where land has become treated as attached to a garden and then the owner wants to hive the land off to sell it.

As for the original question, I do think you need to ask a specialist property lawyer (even if with the current lawyer no solution appears to be forthcoming), and the FT Saturday money section is the place that came to mind as one where I would expect such sticky questions to be discussed by (usually) two experts in their field.

I can certainly see why the current owner of the rights is unresponsive, since any attempt to formalise ownership into 2 distinct halves would inevitably reduce the PP value, if only in terms of potential admin cost to the rights owner, quite apart from the fact that 2 half-fields are less viable financially to him than one bigger field (potential buyers have more to gain from large fields than small ones, because the design and build costs are easier to cover from twice the number of houses).
jeffian
Posted: 09 May 2017 15:44:40(UTC)
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Thank you, Alan, but I am really regretting putting this one up!

Both co-owners are quite happy with the position at the moment. They are each happily using the half adjoining their respective properties and a fence has been erected down the middle by mutual agreement. That was always the intention. There are no issues about 'squatters rights' and they don't care about CGT but the current position, where the whole is jointly owned, needs to be resolved. Clearly there would be a problem if either party wished to sell or, for example, one of them died.

The 'overage' rights run with the land. It makes no difference who owns the land, nor whether the land is developed in part or as a whole. If 'development value' arises, he gets a share of it. I probably mis-stated in saying that he needs to 'give consent', it's just that as his interest is noted at Land Registry, he needs to be a party to the documentation so that there is a direct contractual relationship between him and whoever is the current owner of the land. It is in his interest that that is so. I think what is going on here is that he knows that the land was specifically bought to prevent development and it is highly unlikely to happen - (I imagine the overage rights were bought for a very modest sum as a result) - but hopes that he can extract some value by being difficult. As you say, this needs a lawyer. They already have one, but not one prepared to come up with a solution or take a sufficiently robust line, so the answer is to find one who will but I just thought that in the meantime I might get a legal opinion here (see the thread title!). As it is, I've had plenty of opinions but none actually addressing the issue or having any knowledge of the law!
Mr J
Posted: 10 May 2017 22:54:16(UTC)
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Jeffian, I think you are being somewhat unkind to people genuinely trying to offer helpful suggestions in their own time for free on an Internet forum. Did you really expect to get lots of detailed professional legal advice for free in this way ?
All the suggestions look positive to me.

I think you are right this needs to be resolved for the future before someone inherits an unsaleable property or a boundary dispute or other claim arises. I think neighbours can think because they are agreed on something between them there can be no problem but it can cause serious financial repercussions and problems if they don't resolve the situation legally now while they are both alive, still owning their property, and have a common opinion.

I would have thought they just need to see what it might take to buy out the rights holder.

It seems an odd way to have sold the land and smells of a deliberate act by the original land seller to cause problems. I would have thought the solicitor involved in the joint land purchase would have very strongly advised the neighbours to buy the additional rights as well. After all the value of the land should reflect the chance of gaining future development permission for it anyway.



jeffian
Posted: 10 May 2017 23:35:40(UTC)
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Thanks, Mr J.

"I think you are being somewhat unkind to people genuinely trying to offer helpful suggestions in their own time for free on an Internet forum.....All the suggestions look positive to me."

It may have been a reaction to being accused of "blagging" and "trying to game the system", but perhaps I misunderstood!
sandid3
Posted: 11 May 2017 05:52:28(UTC)
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Quote:
It may have been a reaction to being accused of "blagging" and "trying to game the system", but perhaps I misunderstood!
Don't take it personally, jeffian. My Transactional Analysis training tells me to not be sympathetic with you but to prompt you to assess the position from the outside. In particular you need to look at it from the point of view of the third party.

Property is like investing and poker; it can be emotional but requires rational assessment. Presumably, that's why your relative asked you.

So, why do you want to find a property expert? What then? Is your relative really prepared to go to Court to force this third party to act differently? More likely, are you hoping to find someone to 'take a robust line' - meaning threaten/haress/intimidate?! That wouldn't be very nice and wouldn't be likely to work.

There is a solution and that's to pay the third party a lot of money. What is your emotional reaction to having to tell your relative that? Should you not ask yourself that question?

I think all this does relate very well to investor psychology, which is a good topic for this forum.


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