Building Legal Solutions
The Key to Successful Plot Sales
- AuthorPaul Harrison
Whether selling freehold houses or leasehold flats the preparation of the legal pack at an early stage in the process (ideally before any plots are reserved) is crucial to ensuring a smooth transaction and quick exchange. The last thing you want, as a builder, is delays in getting the plot sales over the line after all the sweat and tears in reaching the end of a development.
Think of the legal pack as the foundations. Over the past few years we have become accustomed to anticipating the enquiries that will be raised by the purchaser’s conveyancer and so we always prepare a comprehensive pre-contract information sheet giving the specific details of the development to answer the most common questions before they even arise!
Here is my ‘shopping list’ of just a few of the important pieces of information that we ask our developer clients to supply and the reasons why.
These are not just plans but Land Registry compliant plans. They have special rules that don’t always make a lot of sense. You can have the most accurate survey but if the boundaries don’t fit within the Land Registry title ‘general boundary’ redline then you’re going to have problems selling the plots. This is why an overlay on the site acquisition is so important. See Wasim’s blog post from last week.
In addition to the redline of the plots, the conveyance plan needs to show any common parts or shared access. It is also helpful to show boundary ownership with an inward ‘T’.
We then send the plans to Land Registry for estate layout approval so we can be sure that there will be no issues with final searches that may delay completion or registration.
Getting the plans in the right format and approved is often one of the biggest delaying factors so they should be prepared early on.
Sourcing the right provider for the structural warranty is worth spending time on as they have to be acceptable under the UK Finance (formerly CML) lender’s handbook. There have been instances in the recent past where the insurer underwriting the policy has fallen over and a new policy needs to be taken out halfway through the build causing time and money. There are specialist brokers who can assist with this process.
Ideally, the buyer’s 10% deposit would be protected by the policy as this is a standard enquiry we receive but this does cost extra.
We would normally include the discharge of all relevant pre-commencement and pre-occupation conditions in the legal pack.
Any variations or non-material amendments to the planning permission should also be advised.
EVIDENCE OF CIL PAYMENT/COMPLIANCE WITH S106 OBLIGATIONS
The buyer’s solicitor will ask for this as standard when they receive their local authority search results so it’s good to deal with this question in the legal pack by providing evidence.
ESTATE MANAGEMENT/SERVICE CHARGE
This applies to both small and large developments but the purchaser will want to know whether a management company will be set up that the residents will become members of or will the developer retain control of the common areas.
In some instances it is advisable to include part of the access within the ownership of each plot with reciprocal rights of access and maintenance obligations. This can save on the costs of administration for a management company especially for a development of only a few plots.
The services to be provided need to be considered carefully and a budget of anticipated costs prepared so that the purchaser will know what the annual payment will be and that it’s reasonable. A high estate management or service charge may put off potential buyers of the plots.
EXTRAS AND AMENDMENTS TO THE PLOT SPECIFICATION
What is the your procedure going to be to deal with the requests that inevitably come in from the buyer when they want to change the carpet colour and other personal choices after exchange? We cover this off with a clause in the contract giving the developer absolute discretion and any agreed variations to be paid by the purchaser in advance.
POSTAL ADDRESS ALLOCATION
It’s always nice to be able to confirm the new address for the plot in the legal pack.
As a firm we have completed around a 1000 plot sales (I’ve lost count) over the last 7 years and our specialist team use this experience to get the best possible result for all our clients.
Give Paul Harrison a call on 01604 456591 to discuss our plot sale service in detail and to obtain a fixed fee quote for your next development.
Author: Paul Harrison
13 November 2020