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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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i sold a house and land in 2005. at the time i instructed my

Customer Question

i sold a house and land in 2005. at the time i instructed my solicitor to include an overage to be protected by a restriction. this was agreed with the seller. years later i found out that the overage was not protected by a restriction. the buyer has nit yet applied for planning permission but it looks like the land is going to be allocated for housing later this year.
is there anything i can do about the situation?
Submitted: 1 year ago.
Category: Law
Expert:  Joshua replied 1 year ago.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I ask when you discovered that the overage had not been properly secured please?Do you have evidence that you instructed your solicitor to provide for an overage?Has any overage been provided for in the transfer deed (i.e. one not protected by either restriction or charge)?Finally is the person that bought the land from you still the owner?
Customer: replied 1 year ago.

1. probably 5 years ago.

2. yes and also the buyers solicitor asked us to confirm if the overage was to be protected by a restriction to which my solicitor replied YES.

3. yes the overage was provided for in the transfer deed.

4. yes the buyer is still the owner.

cheers

Expert:  Joshua replied 1 year ago.
Many thanks. My apologies for the delay in reverting to you owing to the time of day.As things stand the overage is likely to be enforceable because the covenant can (assuming it is been drafted properly) be enforced against the buyer who gave the covenant. The problem as you likely know is that a positive covenant does not automatically bind a successor in title which means a future buyer could take the land without the covenant if it is not protected by a charge or restriction.Based on what you say your solicitor has been negligent in failing to secure the overage and you can raise this with the solicitor. It may be possible to simply fix the issue if the transfer deed has been drafted to provide for a covenant by simply registering a restriction on the title under the authority of the signed transfer deed. If the solicitor failed to include provision for a restirction in the transfer deed as well as forgot to register the actual restriction then the position is not so straightforward and it may require a court application if the buyer is not willing to consent to a restriciton being entered.If the restriction cannot be registered because of a failure in drafting and a failure in including a contractual requirement for a restriction then the solicitor will be liable to you for any loss you suffer as a result. At present you have not suffered any loss but if a situation arises in the future where you are due money under the restroverage and you cannot claim int because the overage cannot be enforced, then you can raise a complaint with the solicitor and if necessary refer the complaint to the Legal Ombudsman service who has the power to award compensation.It is cruicial that you make such a complaint within 3 years of the loss occuring or you may be time barred. There is an overall limit of 15 years in order to make a claim from the point the negligence occured so if it is not possible to rectify the damage you may have to consider making a claim in any event in good time before the expiry of this 15 year overall limit though it may be more difficult to assess damages in these circumstances as it would require a report from a surveyor as to how likely it is that planning might be granted rather than relying on the actual circumstances if you are making a claim with planning in place.http://www.legalombudsman.org.uk/helping-the-public/#making-complaintI hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me.
Customer: replied 1 year ago.

hi the overage has another 10 years to run so in essence another 5 years left re the 15 years limit.

what about rectification of the contract?

Expert:  Joshua replied 1 year ago.
if the overage is another 10 years of life left in it, as you say, this will pass the 15 year limitation period and accordingly, you may need to look to bring a claim if you find the solicitor has been negligent.as above, you may find that the solicitor provided for the registration of a restriction or charge in the drafting of the transfer deed and he is simply forgotten to register it with the land registry; this is relatively easily sold by way of a simple application for registration. If however he has forgotten to include provision for security of the overage in the transfer deed the matter is not so straightforward as above and it would require either a court application or consent of the now owner to register an overage restriction or charge on the title.You mention rectification of the contract. This in part is what I refer to when I refer to the possible necessity of a court application above. If the solicitor has forgotten to include a provision in the transfer deed providing for protection of the overage on the title, but has included such a provision in the contract itself, then a court application may be required the specific performance of the contract though this may now be out of time. If the solicitor had forgotten to include such a provision in the transfer deed and the contract then the matter is even worse and it would be necessary to demonstrate that the contract did not reflect the intentions of the parties at the time (this is known as rectification) in order to establish a right to register protection of the average. such a task is not easy, particularly when both parties were represented by a solicitor as in such circumstances, much deference is put on the final form of the contract, and its terms will not be altered likely by a court without substantive evidence that the terms were not what was agreed - the burden of proof is upon you to show this.Accordingly, based upon what you say, the first step is to contact your solicitor and raise the issue with him. He would appear to be negligent in failing to protect the overage and there is substantive caselaw that demonstrates that the solicitors duty is to take all reasonable steps to secure overage provisions against the title. If the solicitor is not able to secure the overage provisions against the title using the above techniques then you may be able to pursue a claim for loss if you can demonstrate that on the balance of probability it is likely that the property would be ripe for development and but for the failure to protect the overage, you would be entitled to a payment under the overage.Can I help you with anything else or has the above answered your questions satisfactorily?
Expert:  Joshua replied 1 year ago.
Can I help you with anything else or has the above answered your questions satisfactorily? I would be pleased if you could drop me a brief note to let me know if the above was helpful.
Customer: replied 1 year ago.

hi

the site is ripe for development and is likely to be allocated for housing later this year.

what puzzles me is that at the moment, i take it the under personal covenant the owner is still liable to make a payment to me following planning providing he is still the title holder.

therefore what in essence would i be suing the solicitors for?

Expert:  Joshua replied 1 year ago.
I am very happy to respond to the above but I should be grateful if you would kindly provide a rating for my service to date as I need to justify my time spent spent to date on this question.I am grateful for your understanding.
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
Joshua and other Law Specialists are ready to help you
Expert:  Joshua replied 1 year ago.
Many thanks. Is you are forced to take action before any loss has occured as is the case here, initially your position will have to be to allow the solicitor to perfect the security of the overage as we discussed above. If he is able to do so by any of the above techniques then he has completed his instruction albeit with substantive delay, and as you have suffered no loss, there is no basis for any claim other than potentially a reduction as against his fee.If he is unable to secure the overage then your position is exposed to potential loss and you would need to seek a claim based on that potential loss. That claim would need to be supported by surveyors reports and planning reports in order to quantify that potential loss as it is not possible to deal with actual figures because that loss has not crystallised.one would hope however that the solicitor will be able to the fact the protection of the overage, and he will certainly be keen to do so and such a claim would not be necessary.
Customer: replied 1 year ago.

hi, i should have advised you (although the question was never put to me) is that the solicitor has already tried to register the overage with a notice which was refused by the registry. secondly he tried to convince the owner to allow the restriction which was met by a firm NO!

a hypothetical question say the owner is preparing to wait another 10 years so my overage is over. could the solicitors use that as a defence i.e that my overage would be worthless as the owner had no intention of disposing of the land with planning permission. therefore how does the court view the fact that if i looked to sue the solicitors say next year when the owner was till the title holder, but he had not applied for planning, how would the loss be assessed?

Expert:  Joshua replied 1 year ago.
Potential losses are based on a combination of actuarial and expert reports. It cannot be an exact science but the court will try to determine the likely loss using the information supplied by the above reports in order to determine 1) the likely amount of the overage value based on likely planning scenarios and 2) how likely it might be that the overage may bite.
Customer: replied 1 year ago.

hi joshua

i'm still a little lost! at the moment as we know there is no loss. for the next 5 years the owner could do nothing and then apply for planning. he could then sell the plot for next to nothing and flee. if that occurred in 5 years and 1 day i would have no recourse against the solicitors.

if i looked at the above scenario now and i look to protect myself i take it i could start an action against the solicitors as you detailed above. however i am still struggling to see how the court would calculate my losses, especially as at present my interest is protected albeit by a personal covenant?

Expert:  Joshua replied 1 year ago.
I am not sure what I can add to the above in terms of explanation of how losses are quantified. It is of course not striaghtforwad to quantify future potential loss but the above is how it is achieved when it is necessary.
Customer: replied 1 year ago.

sorry for harping on but what i am trying to get my head round is that if i sue now does it matter that 1) there is a personal covenant, 2) the owner has yet to apply for permission & 3) the owner could wait for 10 years?

Expert:  Joshua replied 1 year ago.
All the circumstances must be taken into account and a judge will need to draw all the threads together including the above factors in order to quantify the loss. I do not pretend it is straightforward and you would need to seek counsel opinion in order to ascertain what damages you might be able to claim but it is and can be done using the above approaches.

Unfortunately I did look but I cannt find any reported case law on these circumstances as most of the case law on failure to protect overages deals with situations where the land was subsequently sold and the protection of the personal covenant was lost. But I did find a not altogether different case which involved a failure of solicitors drafting which meant that the claimant lost the benefit of the overage where there was no actual planning permission granted at the time the case was bought to court. In other words in the same way as here, there was no way to quantify actual loss, because there had not been one because no planning had been granted. The report is below - it is a report by solicitors indemnity insurers so the "insured" is the negligent solicitors firm.

The Insured acted for the seller on a disposal which
included an overage payment if planning permission is
obtained. The buyer’s planning application has been
refused and the buyer now wants the restriction
removed from the title. The Insured failed to
incorporate a provision requiring the buyer to appeal
the refusal. Most precedents suitable for this
transaction would require the refusal of planning
permission to be appealed where Counsel advises that
there is at least a 50% chance of success. The seller
has instructed another firm of solicitors and has made
a claim. The insured are unable to provide any
information as to the origin of the precedent used by
them for the overage provisions in this transaction.
More targeted supervision by a senior property lawyer
of the junior fee earner responsible for the drafting of
the contract and a system for proof reading critical
contractual provisions should have identified the
potential problems with the wording used and
avoided a claim which has, to date, been quantified,
on a loss of chance basis, at £125,000.
Customer: replied 1 year ago.

hi joshua

my potential claim is for over 300k. if the solicitors have no joy in registering the restriction would my claim, subject to experts reports, be straightforward?

Expert:  Joshua replied 1 year ago.
The negligence claim would appear to be relatively straightforward but establishing the damages due would be less so as we have both largely agreed above. However counsel that deals with this type of claim would be able to explain in much more detail what would be required and what you might be able to achieve
Customer: replied 1 year ago.

one last point, if the owner sold up tomorrow and he hadn't applied for planning permission is he under any obligation re his purchaser and the overage?

Expert:  Joshua replied 1 year ago.
No he wouldn't be. The buyer would obviously have knowledge of the covenant but as it is a positive covenant it would not bind the purchaser. It would likely lead to enquiries from the purchaser but the seller would have no duties as such.
Customer: replied 1 year ago.

thanks joshua

if i do sue my former solicitors for negligence and succeed, what then happens to the overage clause, if for example it follows its course and say the plot is developed for example in 8 years time? will the solicitors insurers continue to monitor the situation? cheers

Expert:  Joshua replied 1 year ago.
I hope you will forgive me but I regret that I am not able to continue dealing with follow up questions free of charge. I am vey happy to continue to assist but regretably economic reality must bite and we would need to agree a further fee if you require continued assistance with the above. I am grateful for your understanding.

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