Overage Agreements - How to Unlock Their Commercial Potential

Introduction

If you are involved in land development, or if you are advising landowners or developers, then you need to understand what overage agreements are, how they work and how the key mechanisms allocate risk between the parties.

Some of the key mechanisms in overage agreements, such as triggers, enforcement provisions and reasonable endeavours obligations, have been recently interpreted in by courts. This virtual classroom seminar will include a look at the commercial impact of these decisions on developers and landowners/beneficiaries, as well as tips for you to ensure that you do not fall foul of them.

After this session, you will have a clear picture of how each part of an overage agreement allocates risk between developer and landowner/beneficiary. You will receive practical guidance on how to draft and negotiate overage agreements and find out how to explain the commercial risks of overage agreement clauses in clear and simple language, both to themselves and to their clients.

There will be a reminder of how overage agreements are protected and how advisers can avoid a negligence claim for ‘loss of opportunity’, as well as a brief summary of tax implications.

What You Will Learn

This live and interactive course will cover the following:

• Brief Background & Context:
• What is overage and why is it used?
• Typical commercial scenarios (development, planning uplift, resale)
• Key risks for developers, beneficiaries, and advisers
• Core Components of an Overage Agreement
• Trigger events: planning, implementation, disposal, valuation dates
• Calculation mechanics: gross vs net uplift, deductions and costs
• Duration and longstop provisions
• Payment, timing, and interest
• Release provisions and carve-outs
• Drafting Overage Triggers & Calculations
• Common drafting ambiguities and how courts interpret them
• Valuation assumptions and dispute mechanisms
• Avoiding double counting and unintended windfalls
• Equalising overage over an assemble site with multiple landowners/beneficiaries
• Protecting the Overage Obligation
• Legal charges, restrictions, deeds of postponement, and positive covenants
• Guarantees and parent company support
• Insolvency and enforcement risk
• Practical pros and cons of different protection methods
• Tax, Funding & Transactional Issues
• SDLT and tax considerations
• Impact on funding and lender requirements
• Assignability, step-in rights, and refinancings
• Dealing with overage on onward disposals
• Case Law & Common Problem Areas
• Practical Takeaways & Q&A

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.