Frequently a developer will purchase land to carry out development on the basis that the land either is or will be serviced by the vendor. Here are some basic points to watch out for if you are that purchaser or are acting for him:
-
What Is The Vendor Doing?
Does it include, for example:
- Constructing accesses;
- Laying service such as electricity, gas, telecoms, water, sewerage, fire main, surface water drainage;
- Completing landscaping (which may be important to create the required amenity for the land being developed and purchased);
- Removing spoil heaps or otherwise levelling the site;
- Completing decontamination or archaeological works – possibly including those required by the planning authority in respect of an outline planning permission for a larger area;
- Diverting existing services which may require diversion/removal/relocation in order to permit development.
-
When Is The Vendor Doing It?
The completion of the vendor's works needs to link in with and not frustrate the purchaser's development/letting/sale programme. Therefore some works might need to be completed:
- By the time of site purchase; or
- At specified milestones in the purchaser's development programme, e.g. services may need to be installed and operational by the date occurring three months prior to the anticipated opening date of the purchaser's development.
-
Can You Be Sure That The Vendor Can Actually Do The
Works?
The vendor may need consents, permissions or the agreement of third parties in order to complete the works, e.g. planning permission or a servitude/wayleave from a third party to create a new surface water drain. The purchaser will therefore want to ensure before paying for the site that there is no doubt about the ability of the vendor to carry out the works and that the vendor's obligations are in essence the mere "execution" of consented works.
-
Specification, Specification,
Specification...
The purchaser should be careful to ensure that there are no nasty surprises later and that he is careful to contract for what he expects to get. The vendor will after all have every incentive to deliver the works on the cheapest specification possible. The purchaser might therefore want to deal with the following:
- Have the capacities and the materials to be used in respect of the service media been specified?
- Have the terminus or drop off points for services been specified?
- Who is paying connection charges in respect of services?
- Has the invert level of drainage been specified so as to avoid difficulties with finished floor levels?
- Have levels of pavement and access areas been specified to avoid level differences which might give rise to DDA problems?
- If levelling work is involved, have finished levels been specified?
-
What If The Vendor Doesn't Do It?
If the purchaser is depending on the vendor completing works after site purchase and the vendor fails to do so, then the purchaser should consider what rights it has. The purchaser may want:
- L&A damages for late completion;
- The right to step in to complete the works, including the right to enter the vendor's land in order to do so;
- The right to retain sums from the purchase price as security for performance of the vendor's works and provide funds in case of the exercise of step-in rights.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.