Property Development issues
  • 26th May 2014

Our client was a property development company ("DC") who owned a development site. The intention was to sell the freehold site to a Housing Association ("HA") but at the same time enter into a building contract with them to build out the development, providing 20 affordable housing units.

There were numerous issues with this site which meant that we had to proceed with a conditional contract and the issues of this matter can be best broken down and reviewed by looking at each of the contract conditions.

The Planning Condition

Planning permission had not been obtained prior to this deal and so the contract was conditional on the grant of detailed planning permission for 20 residential dwellings as well as any associated planning agreements, a Section 106 Agreement for example.

lt turned out that planning was granted a few days before exchange and so this contract condition was not an issue and essentially satisfied.

The Access & Services Condition

As part of the development, a main accessway was required which would also be the route of all services into the development.

The road abutting the site, which would become that main form of access and route of services to the site, was an unadopted and unregistered road which essentially meant that DC had no rights over it, with no formal access to their site. This road was shared by 4 adjoining landowners who used the road to access their properties and who were largely against the development taking place.

The Access  and Services Condition contained in the contract specified that the accessway must be made up to adoptable standards, with the installation of the required services under that accessway, in accordance with the build contract and planning permission before the development could commence.
 
As DC clearly had no rights to do this and they were up against resistance from the adjoining landowners, an indemnity policy was put in place. lt was a fairly detailed policy and the main areas it covered are as follows:
 

  • In order to lay the required services under the road this would involve the initial breaking up of it in order to get underneath. The policy therefore not only had to cover the laying of services, but also the breaking up of the road in order to do so. lt could be argued that the breaking up of the road is an obvious requirement where laying services but the solicitors acting for HA did not agree and so to ensure that they were fully covered it was requested that the breaking up of the road was specifically included,  as well as the laying of the services.
  • Once the services were laid, the road was required to be made up to adoptable standards and this was also specified in the indemnity policy.
  • lt was a requirement of the insurance that whilst the breaking up and relaying of the road was taking place - access for the adjoining landowners to their properties was maintained. lt was also specified that there should be no communication with these landowners, as is the case with any indemnity policy and a potential cause of claim.
  • With any development site there is going to be an increase in traffic in order to serve that site. lt was also therefore important that this increase in traffic was included in the policy - especially considering that the adjoining landowners use that same road to access their own properties.

Once this indemnity policy was put in place it allowed DC to proceed with the breaking up of the road, in order to lay the services and make the road up to adoptable standards - thereby satisfying this contract condition.

The Ecology, Wildlife & Mitigation Condition

As part of the due diligence, it was discovered that endangered newts were present on site and therefore careful and strictly controlled ecological mitigation and removal was required before any development  could commence. This is a serious issue and often causes delay on developments. lt is therefore important that these matters are discovered as early on as possible so that mitigation and removal can be dealt with, so as not to hold up development.
 
Mitigation and removal, depending on the species in question, can usually only take place at certain times of the year- which coincide with hibernation and life cycles.

This was therefore made a condition of the contract and DC had tight timescales, for the mitigation and removal, which was required to satisfy the contract condition before development could begin.

All of these tasks were co-ordinated through Whitehead Monckton Property Investor and Developers team, headed by Vicky Stoodley planning partner.

If you would like to discuss any development  opportunities and how we can assist you please contact Vicky Stoodley.

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