Buyer's solicitor asking for Section 106 Agreement?

(17 Posts)
oatcakesarenotfood Tue 14-Jun-16 12:26:00

Just wondering if anyone else has been asked for details of section 106 Agreement when selling their property? Our buyer's solicitor has requested this and my fairly useless conveyancer has not really explained why it's needed. We are selling a 13 year old property this is apart of a fairly large housing development, we have already provided the planning permission documents and the NHBC documents to our buyer's solicitor and now he is asking for this too? Just keen to know if this a standard conveyancing question or have any other mumsnetters come across this too, thanks.

namechangedtoday15 Tue 14-Jun-16 12:35:05

I'm not an expert by any stretch but it should ordinarily be with your deeds - it is effectively a document that evidences an agreement for who is responsible for the upkeep / maintenance of the roads within the estate. A section 106 notice (I think) shows that the Council has adopted the roads and will maintain them. It is standard for a buyer to request a copy because if the Council have not adopted the road, then potentially the owners of the properties on the estate would have to contribute.

wowfudge Tue 14-Jun-16 12:38:14

The section 106 agreement will have been between the developer and the local council. Details will be available with the original planning application. If your council is forward thinking (ours isn't) you will be able to download this from the council's website.

A s106 agreement is for a community amenity of some description which the developer has to provide. It could be a pelican crossing or roundabout, a park area or even an art work.

It sounds like overkill to me, but if the developer hasn't fulfilled their side of the agreement they may potentially be an issue. It's unlikely though - I would have expected the council to take enforcement action by now if they hadn't done whatever it was.

namechangedtoday15 Tue 14-Jun-16 12:41:39

Ignore my post - wowfudge sounds much more knowledgable smile

whatsthatcomingoverthehill Tue 14-Jun-16 12:45:59

I think having roads adopted is a section 278 agreement.

I agree with wowfudge that it does seem like overkill. A s106 could potentially be enforced against subsequent owners but I've never heard of it happening.

oatcakesarenotfood Tue 14-Jun-16 12:49:26

Thanks name and Wow, really helpful.
Ok, so I will get in touch with our local council and see if I can get hold of the agreement, if I wait for my conveyancer we may still be here at Christmas! Hopefully all will be ok, all roads and green spaces are adopted and maintained by the council.

oatcakesarenotfood Tue 14-Jun-16 12:54:54

Thanks Whats, I think the buyer's solicitor is especially pedantic! The additional enquiries raised have been very comprehensive, great for the buyer and a major pain for me as my conveyancer just passes them on and leaves me to do the digging.

mollie123 Tue 14-Jun-16 13:01:27

I always thought section 106 was to do with an agreement between the developer and the planning authorities re 'affordable' (hollow laugh) houses in order to get their plans through.
either way the council should have a copy.

MillieMoodle Tue 14-Jun-16 13:11:00

A s106 agreement is a planning obligation agreement. So the local authority will have said, effectively, to the developer that they will grant planning permission for X development provided the developer contributes money towards e.g. a new school, play park, transport links etc. There will be certain amounts the developer will need to pay to the council at certain stages during the development.

The reason your buyers' solicitor wants to see it is because they contain financial obligations which can sometimes be passed on to homeowners (as successors in title to the developers). Usually they contain clauses stating that individual plot or home owners are not bound by the financial obligations, but sometimes they don't. The buyers' solicitor can't advise their client properly without seeing the document. It's a standard query and the buyers' solicitor isn't being pedantic, he or she is doing their job.

They can be obtained from the local authority, although you might have to pay for it. Or there might be a copy with the documents you got from your solicitor when you bought your house.

oatcakesarenotfood Tue 14-Jun-16 13:35:19

Thanks Millie, that's really helpful to know. I didn't know that it's a standard enquiry as my conveyancer didn't explain it as such. I have looked through the documents we hold and as it's not amongst those, I will ring the council and try to get hold of the agreement.

oatcakesarenotfood Tue 14-Jun-16 14:47:12

Thanks lovely mumsnetters, I have contacted the council planning department and they very kindly sent me the Section 106 Agreement and Deed of Variation by email. Very impressed with our local council, very helpful and obliging, hopefully these documents will satisfy the purchaser's solicitor.

MillieMoodle Tue 14-Jun-16 21:08:04

Sounds good, hope it all goes smoothly from now on!

traciej82 Tue 21-Jun-16 12:41:43

This is very important! well not so much as its 13 years!
I bought my new house 9 years ago! the council are now asking me for 2.5k as the developers didn't pay the council and went bust!

Im fighting it as the solicitors at the time didn't advise me that this was an outstanding debt when I purchased the property. Part of the development was still being built that's why they are saying it didn't show up in the searches.

Any advice would be great!

whatsthatcomingoverthehill Tue 21-Jun-16 13:19:36

Eeek that doesn't sound great tracie. I'm not a lawyer, and if you do want to fight it you would need proper advice. As far as I know you are liable for the debt, but:

- Is there a time limit it can be enforced?
- What was the money for? s106 isn't just paying the council off, it is for specific action, such as highway improvements. If the council haven't done these works and are showing no intention to then they might not be able to enforce the debt.
- Did your solicitors fail in their duty and so could be sued?

Unfortunately it might cost a fair bit to find out whether you can get out of the s106.

Imperialleather2 Tue 21-Jun-16 13:44:59

You need a copy of the s.106 agreememt..they often contains provisions that state plot buyers aren't liable although sometimes.they don't.

If it doesn't and.you weren't advised of this fact then your claim will.be against your solicitor for negligence.

If it wansn't on then.search result then possibly a claim.against the council for an incorrect search result.

Did the.sol ask any enquiries and if so what reply was given- if a false reply not much help.as the developer no longer exists to sue....

What is the date of the s.106 agreement? Was it after you bought your house? If so.you should have been a party to.it.

You need to see.a specialist residential development solicitor who can look into it properly and look at titles etc. Then potentially a litigator.

I would expect it to be about 3 hours work.to look through the docs/old file and give you an idea. Depending where you are on the country and rates it could really vary.

traciej82 Tue 21-Jun-16 14:03:17

Oh wow!
you guys are good.
OK the S106 was taken out in Feb 2007 - I completed in 1st June 2007.
It does say that the debt can be passed down
and it does say that the council can chase for 12 years to recover the debt.
They council are saying its for the access road that leads in to the back of my property.

I'm going to pull out the original searches and if its not on there and the Solicitor can show it wasn't on the searches then the council have no case, it wasn't correctly detailed as a debt on the land registry.

If it is there and nothing in the paper work to say I was advised of this debt and the 12 year period I will go back to my solicitor for a claim.

Its all a lot of work!

the best part is I didn't even want to move!, the council bought me out of my old home as part of a regeneration scheme and made me move!!

beccabanana Thu 21-Jul-16 23:17:03

I know I'm late to the party on this and I'm currently experiencing a similar situation but as a buyer. We're at the point of exchanging and my solicitor has noted there is no Section 106 indemnity on the contract. After weeks and weeks of chasing and banging out head against a brick wall, it turns out the developers haven't added it as should they go bust, they don't want to be chased for these costs and it would therefore be passed to the buyers of the first 50% of the development.
My solicitor is extremely thorough and explained that so many developers get away with this in the hope that lawyers and mortgage lenders 'presume' the S106 is in place and it's only when either the developer goes bust or you come to completion and for some reason the lenders want to see the contract, it becomes a problem.
In our case, if we exchange without and the lender finds out, our home becomes un-mortgageable but we're contractually bound to it or if the developer went bust after, our home would get a land charge against it for thousands (up to £300k) and either we pay it or pay fighting against it.
We're currently running our contract passed our lenders with the full expectation they will say hell no and withdraw.
You'd think it wouldn't happen but it seems to be very common with developers

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