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LondonlawyerJ
LondonlawyerJ, Solicitor
Category: Property Law
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Experience:  Experienced solicitor
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i sold a property in 2005 with a 40% overage clause. clause

Customer Question

i sold a property in 2005 with a 40% overage clause. clause was to be protected by a restriction. this was agreed between the parties. following completion my solicitor failed to register a restriction. 5 years later i checked the land registry title and there was no mention of the overage. it transpired that the registry had failed to enter the overage clause onto the title. they amended the title to include the overage. however this was only entered as a personal covenant. i thought this was adequate to protect my overage. however i found out in 2012 that the covenant does not run with the land. the landowner has not sold the land but it is likely that planning will be granted for 30 plus houses. the overage lasts for another nine years.

what action can i take against the solicitors to protect myself?
Submitted: 2 years ago.
Category: Property Law
Expert:  LondonlawyerJ replied 2 years ago.

LondonlawyerJ :

Hello, I am a solicitor with over 15 years experience. I will try to help you with this.

LondonlawyerJ :

Was the overage included as part of the contract of sale and what was the event anticipated to trigger the overage?

JACUSTOMER-ak82ldt6- :

hi

JACUSTOMER-ak82ldt6- :

yes the overage was included in the contract of sale. trigger was on receipt of planning permission and then disposal

LondonlawyerJ :

Thankyou for that. I am in meetings fro most of this morning but will reply later today.

LondonlawyerJ :

It I usually best to protect one’s interest under an overage by holding a charge on the property or at the very least by entering a restriction on the register. If this is not done then your right to payment under the clause is a personal contractual relationship with the person who bought the property from you. If they fall into financial difficulties then you may not be able to enforce against any successors in title.

I know not if there is a risk of this happening. If the new owner gets planning permission such as to trigger the overage then you can simply write to him pointing out that the trigger has been met and that you look forward to receiving the money on disposal of the property. There may be a considerable sum of money at stake here and therefore you may want to use solicitors. Overages are a notoriously tricky area of law (usually involving a good deal of negotiation before they are agreed) and it would be wise to use a lawyer in the orthodox way for this.

As far as your solicitors are concerned there may be a good reason why they have not registered a restriction against the property but if they have failed to protect your interests and you suffer loss (eg if yor purchaser for some reason loses possession of the property and your overage becomes potentially worthless) then you can sue you old solicitor for the losses you incur as a result.

JACUSTOMER-ak82ldt6- :

prior to completion it was agreed between all parties to enter a restriction.

JACUSTOMER-ak82ldt6- :

post completion my solicitor simply forgot to carry this out. 18 months ago my new solicitor made me aware of the implications of this mistake. my old solicitor contacted the purchaser and invited him to sign a new restriction. NO was his answer. at present i cannot foresee any problems with the purchaser selling then doing a bunk, but with the sums involved he could. is there anything i can do in the mean time against the solicitor's to protect my interests. more importantly are there any limitation issues?

LondonlawyerJ :

In a negligence claim, time will usually run for six years from the date when the negligent act or omission occurred. It may be possible to bring a claim outside the six-year limitation period if the damage complained of was not discovered until after theexpiry of the six-year limitation period ("latent damage"). This extension to the ordinary six-year limitation period was introduced by the Latent Damage Act 1986.

In such circumstances, a claimant has three years from either the date of knowledge of loss or the date when he ought reasonably to have known of his loss. What constitutes "ought reasonably to have known" depends on the circumstances of the case

There is a 15-year long-stop date from the date of the defendant's negligent act or omission.

You are outside the basic 6 year limit but may be covered by the latent damage exception. However as you became aware of the lack of a restriction in 2010 this may be problematic. Limitation issues can be very complex and you should seek legal advice on this in the orthodox face to face way

LondonlawyerJ :

in terms of what you can do about protecting your position you hso get advice as suggested above. It may be that you will need to issue protective proceedings but this will require detailed face to face legal advice I am afraid.

JACUSTOMER-ak82ldt6- :

thank you. i understand all that. how does issuing protective proceedings work with a potential 9 year wait (to end of overage) and the pre action protocol for professional negligence claims?

JACUSTOMER-ak82ldt6- :

there was one other question. if it was expressly agreed between the parties prior to contracts that the overage was to be protected by a restriction could i apply to the court for rectification of the contract?

LondonlawyerJ :

I think there could be difficulties with the limitation and you should get legal advice face to face on it. You are right in that issuing protectively will breach the protocol which will complicate matters and lead to potential costs implications for you. But if you need to issue to protect your position you can do so.

LondonlawyerJ :

I don't think that rectification is the right remedy for you. Compensation for harm suffered as a result of the negligence of the solicitor in not getting a restriction entered is more appropriate

JACUSTOMER-ak82ldt6- :

firstly is it possible for rectification re the contract i.e. have the contract amended to include the restriction. secondly how can i claim compensation, if as of yet, i have not suffered any damage?

LondonlawyerJ :

I thought you said that it was part of the contract but there had been a failure to deliver that term of the contract. In htis e circumstances it is not a rectification situation.

JACUSTOMER-ak82ldt6- :

hi sorry. no the overage clause was inserted into the contract but there was no mention of a restriction to protect such. it was merely a personal covenant...

LondonlawyerJ :

So the agreement to enter a restriction was oart of the agremement. A

LondonlawyerJ :

It was for some reason not included in the writtn contract and it was never registered. Do the other side agree that it was part of the agreement or do they dispute it?

JACUSTOMER-ak82ldt6- :

hi prior to completion the other party asked us whether the overage was to be protected by an overage to which we replied yes. the owner now obviously refuses to agree to a restriction.

LondonlawyerJ :

So was there an agreement to use a restriction? If they asked whether you wanted it and you said yes but they did not agree to it then it may be there was no such agreement. Was there ever an unambiguous acceptance by the buyer to a restriction?

JACUSTOMER-ak82ldt6- :

hi. the only reference is in their pre contract enquiries where they ask is the overage clause to be protected by a restriction to which we replied 'yes'... at no stage did they ever object to it.

LondonlawyerJ :

It seems to me that there is a doubt as to whether it was included or not. There are complex issues here. Overages are not straight forward and neither are limitation issues. You need to get face to face advice on this I am afraid.

JACUSTOMER-ak82ldt6- :

isn't the limitation period extended with respect to a property agreement i.e. 12 years?

LondonlawyerJ :

If the action relates to a contract under seal ie a deed then the limitation period is 12 years. Under a regular contract the time limits are as set out above.

JACUSTOMER-ak82ldt6- :

hi, is the contract for a sale of property therefore when executed a deed. in other words what i am trying to ask is would my time limit be 6 or 12 years?

LondonlawyerJ :

If it was a breach of contract action arising out of a deed then yes it would be 12 years. If it is a negligence action against your solicitor it is 6 years subject to the matters stated above. Your situation is complex and you need to see a lawyer about this.

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