Feeling bullied, should we pull out?

[DobbieFreeElf]

I’ve come here to get some opinions from people removed from the situation.

We had an offer accepted on a house in September, the house fits our, very specific, needs and although we would like to improve it over the years (new kitchen, bathrooms, maybe extension) we would be planning this to be a home for 20 years.

The house is an adjoining paddock, a couple of acres, which is ideal as I have always had horses (prior to kids) and when the little people are bigger I would like to get another.

We were all set to exchange on the Monday before Xmas when our solicitor calls to say that the sellers want to impose an Overage clause (also called uplift/ clawback) on the land. In essence this means that if planning permission is granted on the land we must pay a percentage of the increase in value to the sellers. We felt completely blindsided as we had never even heard of this before that date.

Aside from potentially building a couple of stables in the future we have absolutely no plans to develop the land. (Why would we, we love the house because it is rural).

I can’t decide if we should cut our losses and walk away now.

Now the seller is threatening to put the house back on the market next Monday. We feel backed into a corner and bullied.

Initially we were dead set against the overage (especially as it was dropped on us at the 11th hour) but having had time to look around at what else is on the market (nothing that meets our needs), thinking about the 15k extra we will have to pay on another property (as it’s doubtful there would be a house we would complete on before the SD holiday ends), the £2k+ we’ve already spent on conveyancing, searches, surveys, inspections etc. and many other factors we had decided that we would be open to the overage (as long as we negotiate terms that we are ok with)

Are we stupid, should we walk away, is this fate giving a massive warning sign...

I think so @LIZS. They said they had intended to donut all along but “forgot” until the last minute...

Did I mention the extra £1k our solicitor says it will cost us in legal fees? 😫

Can you negotiate? A sliding % after 10 years?

We are lucky to have an alternative accommodation lined up (in the form of a family member’s holiday cottage in the valleys) at least we won’t be homeless 🤷🏻‍♀️

I'd call their bluff.

I appreciate it's very easy for me to say this but they just seem so unscrupulous, I would worry what else they will pull on you.

Also, I find it hard to believe that they will get a buyer again so late in the day.

We have been waiting two months for our buyers mortgage to be approved. There are so many backlogs with surveys and with the banks, unless they have cash buyer it is unlikely for another sale to complete in time.

@BackwardsGoing quite honestly I was going to say to them they could have a much higher percentage for a much shorter term like 75% for 5 years, short term pain

bhwsolicitors.com/overage-clauses-10-things-think-buyers/

Useful advice on this.

5 to 10 years and specify residential property only and only on the paddock.

Otherwise you are paying them now but allowing them to keep a significant interest in the asset in which case it should be valued at a significant discount when sold now.

I know @BlackKittyKat that’s why I want to be strong and play hardball, it would be much easier if they were also invested in a purchase.

Maybe they just like playing this game and never really intend to sell it

We have land, but ours is a good mile from the village so not likely to be a prospect for development for years. But a local farm was sold a couple of years ago and the fields closest to the village went for £80k an acre, whereas the land further away went for £10k an acre. All the land was green belt. The land nearest the village has now been sold to a developer who has now got planning permission. To be fair I probably would hold onto our land if we had to sell the house. I wonder if the seller’s children think the estate agent hasn’t taken the possibility of developing into account with the valuation?

I'm enraged on your behalf! 🤬👹

I would compromise on 10 years (offer 5 initially) its to prevent you turning it over straight away which isn't your intention

I'd instruct my solicitor to formally refuse the condition. Don't talk to the vendors, argue the toss or threaten to walk away.

It's a bluff. They are just trying it on. They may be retired but of course they are planning to move out on completion. At this late stage they had surely contracted to buy or rent another property to move into, packed and booked a packing and removal firm. Defaulting on any of those contracts would cost them money and a great deal of inconvenience .

     You pay a solicitor to  work for you, and this is one of their expected tasks; stonewalling silly try-ons from the other  side.  Hold your nerve.

@DobbieFreeElf

That’s good advice *@BlackKittyKat* I just didn’t know who I could ask about this. Their EA is hammering on about them receiving “multiple greater offers” for the land and how it will benefit us all in the future. If it is a sound financial investment then that should be considered too but I can’t help be cynical and think the EA is just trying to tell us what a great deal we are getting

Ah...Ha!

The estate agent is behind this, if you ask me. I reckon they have a property developer or two in their pockets who could very well be interested in the land as a separate purchase, and the agent could well be in for a decent backhander commission if they can arrange it. To cover their backs they have advised the seller to put this clause in place in order to either put you off completely, to up the price or to just buy the house and leave the land for someone else to buy.

It might be worth contacting the local council to see whether anyone has put out feelers with regard to outline planning permission on the site.

@2bazookas that’s interesting, our solicitor told us we should be negotiating this ourselves through the EA

@rollinggreenhills I hadn’t thought of that, I will try the local council. It’s all been much harder being between Xmas and NY (on top of a global pandemic!!)

I've never heard of one of those clauses, but then none of my property purchases so far have been of the type of property you describe.

It sounds like cheeky fuckery to me, and absolute greed. I would be angry about it being inserted at the eleventh hour like this. After all, you have already been spending money on search fees, possibly surveyors and some solicitor stuff to get to this stage.

I would be very reluctant to accept any clause that tied me to the vendor after the sale had completely, and 40 years at 25% is a piss-take.

If desperate for the property I might try to negotiate for a much shorter term (10 years) and it much lower percentage (10 or 15%, no more). Take your solicitor's advice on how to limit the duration and percentage of the clause, IF (quite a big if) you were to accept it.

Otherwise, I'm afraid you may have to be prepared to walk away.

Maybe the cheeky fuckers are counting on you being so desperate to get the transaction over with at this late stage that you just accept this. Maybe they haven't counted on you pulling out or threatening to, so if you did then maybe it would shock them into dropping the demand No guarantees with that though.

Firstly this is standard. What is unusual is the late introduction. It is typical on most paddocks/fields. So if you find somewhere else you may well find it is a clause again.

What varies are the terms.

A sliding percentage
A percentage of the cost of the new house not the land (that stopped us buying once)

You could ask to lease the field a 25 year transferable lease? And still buy the house.

As PPs have said, the main issue will be in the resale value. We looked around a place that had land with an uplift clause and it put us off buying it. It wouldn't have felt like our property knowing there was a profiteering landowner somewhere ready to squeeze us for cash.

"Firstly this is standard. What is unusual is the late introduction. It is typical on most paddocks/fields."

No, it's really not. Perhaps in the overcrowded SE of England it is but it isn't common anywhere else. Where are you based, OP?

Your solicitor is being a bit crap saying that. Yes you can negotiate it but equally your solicitor probably can come up with a whole heap of covenants to put on them if they want to play that game.

If it was me I would literally say to the agent; I'm not playing games tell them they've got two days or we are buying something else.

I'm raging for you!

That would totally put me off. They “forgot”? More like they wanted you to be invested in the property by the time you found out as they knew it’d put you off. Sneaky fuckers.

They’ve deliberately dropped it on you last minute banking on you being desperate enough to complete that you agree to it. I’d call their bluff tbh

A 40 year overage really isn't standard in resi/individual transactions. I've only ever seen in used in B2B transactions worth quite a bit, where planning permissions were anticipated and even then overage clauses were never as long as this.

Yes @krustykittens, it really really is standard.
What is not standard is the late mention of it.

@krustykittens

"Firstly this is standard. What is unusual is the late introduction. It is typical on most paddocks/fields."

No, it's really not. Perhaps in the overcrowded SE of England it is but it isn't common anywhere else. Where are you based, OP?

Yorkshire

I have bought and sold 6 houses that have had this condition on paddocks, fields and even gardens. It is very common on rural properties.

It is negligent not to add one when you sell really. Landowners are very aware than panning can change rapidly and at the moment it is a bit of a free for all (even in national park).

Most plots for the last 20 years at least in our old village had it. Or the owner retains the land and leases it to the new house owner.

We now live in a town and it was a condition on a house a few doors down very recently.

Also if they’ve had multiple great offers they’d not need to put it back on the market, they’d just need to verify the offers were still valid and pull out of the sale

Although to overage clauses are standard (I've drafted more than my fair share over the years) the length is not standard.