Home and Housing
Overage Agreements and Clauses Explained
Summary
An overage agreement, sometimes referred to as a provision, is a type of property contract which means a buyer will pay more than the original purchase price when certain conditions are met. This type of contract is really popular with sellers as it allows them to regain some of the value of their property or land after a sale has been made. Basically, the seller benefits from the upsurge in value of land after a buyer obtains planning permission to build houses or other properties. Whether you are a seller or buyer, this article will help property professionals and first-time investors understand how overage agreements work, the benefits of this type of contract clause and why you may want to take advantage of them. * The relevance of a trigger event * When to include overage clauses * When not to include overage clauses * Positive overage vs negative overage * How is overage calculated * Tips to create an overage agreement Overage agreements are also known as uplift or claw back clauses, because they allow a seller to benefit from the uplift in value of their land and ‘claw back’ some of its value after a sale has been made. The overage agreement is usually triggered by certain.
Key information
- The relevance of a trigger event
- When to include overage clauses
- When not to include overage clauses
- Positive overage vs negative overage
- Tips to create an overage agreement
- Planning permission or change of use being granted on a development
- Planning permission being implemented
- Approved change of use for a building
- Demolition and reconstruction of a building
- Permitted development rights being granted
- Development project beginning
- Selling land to a Special Purpose Vehicle for development
Practical guidance
Related topics
More in this area
Sources
- Lawhive — Overage Agreements and Clauses Explained
This is signposting information from the Legal Shaman wiki, not legal advice. Always consult a qualified solicitor for your situation.