However, the main drawback is that the landowner and developer sit on opposite sides of the option table and are thus on the hot seat under many conditions, including the purchase price and the amount of the overrun. This adversarial approach could complicate the conclusion of the agreement and even potentially derail the agreement. The transport contract, in which landowners and developers work in the same way for a common purpose, could therefore be negotiated more easily and therefore concluded. The developer will commit to using its funding, experience and expertise to obtain the land building permit – efforts that are generally at risk to the developer, as the landowner is not expected to provide the funds necessary for further planning. Under an option agreement, if the terms of a section 106 contractual contribution are too demanding in the developer`s eyes, the developer would not exercise the possibility – only the cost of the building permit application and option fees – of the costs actually sunk. A “liquid” land aid agreement does NOT lead to a stamp duty (hoorah!). In fact, most transportation agreements are not “cash” agreements, which may be subject to stamp duty depending on the structure of the transaction, particularly when they fall under Section 44A of the Finance Act 2003. In order to ensure that the transport agreement is properly structured to avoid the LTDS legally or if the structure of the contract is unavoidable, these costs will be taken into account in the agreement between the parties. The country still belongs to them – while the developer works to get the building permit, you can continue to use it for everything you`ve used before. You are asked not to do anything that would increase development costs, or to sell it without informing the developer, but otherwise your use of the country is unfettered. Rebecca Mason, a development and land specialist and head of the Holmes-Hills team of commercial property solicitors, discusses the issue of payment security as part of land promotion agreements.
VAT is another potential trap that could seriously take the owner of the land out of pocket. Assuming that the developer collects VAT on its share of the product, but that the lessor is not able to recover VAT, a transport contract for the owner of the land cannot function at all. Instead, it may prefer to sell through an option agreement in the absence of VAT issues. As you can see, there are many ways to secure payments under a land assistance contract, and any particular circumstance will dictate which one is best suited to the transaction. No method is watertight and, since land aid is a development zone, the methods listed below are certainly not exhaustive. So far, there has been no court decision on the effectiveness of the various methods. In most years, there is no security for this payment and the parties will see it as a risk that deserves to be taken. However, as land values continue to rise and more and more promotion agreements are entered into, the importance of future payment by a landowner to a landowner under a land promotion contract should not be underestimated.
While landowners may decide to question the assessment, it takes time and is costly. The developer always has the advantage, because the estimate is based on the building permit and the technical information it provides.