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Aston Lawyer
Aston Lawyer, Solicitor
Category: Property Law
Satisfied Customers: 10738
Experience:  LLB(HONS) 23 years of experience in dealing with Conveyancing and Property Law
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I'm looking at purchasing a property at auction. The

Customer Question

i'm looking at purchasing a property at auction. The property consists on 1 farm house several older outbuildings and 15 arces of lands.
The property is being sold by a council who are adding an overage to all the land and some of the outbuildings. They are protecting this overage with a first legal charge on the title, in the draft CH1 document is a plan detailing the area covered by the overage. I'm concerned I could end up with a property i'm unable to sell in the future as lending will prove difficult despite the fact the overage shouldn't effect the main building. What option do I have other than walk away? Could the title be split in the future? what effect would this have on the charge if one title contained none of the land detailed in the overage area. Unfortunately the seller seems reluctant to split the title in auction transaction.
Submitted: 4 months ago.
Category: Property Law
Customer: replied 4 months ago.
I've added the draft TP1, CH1
Expert:  Aston Lawyer replied 4 months ago.

Hi, thanks for your enquiry.

The Council will be imposing the overage provision to protect any part of the land they are selling. As the whole of the land Somerset are selling will be granted one Land Registry Title, the overage will affect the whole of the land and it won't be possible for you to change this in the future. Hence, even if you were to sell only part of the land at a later date, your Buyer will be subject to the overage provision.

As a side point, having read the overage provision, I note it will subsist for 50 years, and the Council are entitled to 50% uplift. An Overage agreement would normally last for 20-35 years and it would be reasonable for the uplift to be only 35% so the Council are being slightly unreasonable in their approach. However, as it is going to Auction, they won't be changing this, so it is really up to you to decide whether or not to bid.

Please note that if you were to sell the building(s) to a party who requires a residential Mortgage, the majority of Lenders would still agree to lend even with an overage provision. This is because even if the overage provision kicked in at a later date, the buildings/land would be valued more than they are in their current state. I hope this assists, and gives you an overview to make a decision.

If so, I would be grateful if you could rate my answer in the top right hand corner of your screen. Kind Regards Al

Customer: replied 4 months ago.
Hi Aston,
I've been led to believe that most lenders wouldn't agree to lend with the overage provision legal charge. Do you have experience of this? an independent lender I have spoken to today indicated they have only come across this situation and lent on it twice in the last 10 years! My understanding was that because it is a 1st charge they wouldn't be interested.
Expert:  Aston Lawyer replied 4 months ago.

Hi Richard, sorry to back track slightly (I had forgotten the Council were registering the overage with an actual Charge).

Normally, overages aren't protected by a Charge, and in such circumstances, I have never known a Lender to refuse to lend. In this instance, you are best to be advised by a Mortgage broker, as you are indeed correct in that Mortgagee Lenders will normally insist on having a 1st Charge over the property.

Sorry for misleading you in my first answer in respect of this point.

Kind Regards Al