Client Overview
Johnson & Boon, through its Director Robert Boon, acted for a major landowning client operating within the leisure sector. The client owned a significant commercial landholding in the Midlands and sought legal advice in connection with a proposed sale to a national residential developer.
The client’s primary objective was to complete a commercially viable sale while ensuring they retained the ability to benefit from any future uplift in value should the land be redeveloped for residential use.
The Matter
The transaction related to the sale of multi-million-pound commercial land which was currently historically used for the running of factories and other such operations. The purchaser intended to apply for planning permission to change the use of the site from commercial to residential development and then fully develop the site with a housing estate.
The matter was complex due to a combination of existing legal and commercial factors, including:
- A leasehold interest over the land that was approaching expiry
- Existing historic overage provisions that required discharge on completion
- The need to negotiate new overage arrangements in favour of the client
- The requirement to balance protection of the client’s financial interests with the purchaser’s ability to develop the site
In addition to the original transaction, Johnson & Boon were later instructed to advise on a renegotiation of the overage provisions approximately two years after completion, following changes in the parties’ commercial positions.
Key Legal Issues
The central legal challenge was ensuring that the sale documentation properly reflected the development element of the transaction, allowing the freedom that needed but also safeguarded the client’s long-term interests.
Key issues included:
- Drafting enforceable and commercially realistic overage provisions
- Preventing the land from being transferred or structured in a way that avoided overage obligations
- Clearly defining trigger events linked to planning permission and development outcomes
- Ensuring the overage structure aligned with both parties’ commercial objectives
Overage agreements are highly technical, and careful drafting was required to avoid ambiguity or future disputes.
Our Approach
Johnson & Boon adopted a strategic, commercially focused approach. We worked closely with the client to identify their preferred outcome and then structured the transaction to achieve that position while addressing potential risks.
We advised the client at each stage of the transaction, highlighting possible future problems that might arise if the Purchaser was granted too much freedom over the land, any gaps which might allow them to avoid paying the overage, developing contractual limitations that mitigated those problems and negotiated robust contractual protections which protected our client but still balanced the needs of the developer. The process involved detailed and prolonged negotiations with the purchaser’s legal team, particularly around the wording and operation of the overage provisions.
The matter required sustained attention throughout the main transaction period due to its technical nature and the importance of precision in the drafting.
Subsequent Renegotiation
Two years after completion, the parties revisited the overage arrangements on commercial grounds. The client was commercially aware and open to revisiting the structure to allow the purchaser to progress development while preserving the client’s entitlement to additional value.
Johnson & Boon advised on the renegotiation, ensuring the revised terms continued to protect the client’s interests while facilitating progress on the development.
The matter was substantially helped by both sides representatives being specialists in this field and thus having the required knowledge and experience to engage in meaningful discussions and negotiations which resolved points as they arose in a timely and sensible manner.
Outcome
The transaction completed successfully, delivering immediate value to the client and securing future overage payments linked to planning outcomes. The later renegotiation further demonstrated the flexibility and commercial foresight built into the original structure.
Key Takeaways
This case study highlights several important considerations for landowners and developers:
- The sale value of land should not always be limited to its existing use
- Overage provisions can be an effective mechanism to capture future development value
- Successful commercial property transactions require both technical legal expertise and a strong understanding of commercial objectives
Insight from Johnson and Boon
“Commercial property transactions can range from straightforward to highly technical. Understanding what the parties are trying to achieve, both legally and commercially, is essential to delivering effective and pragmatic advice which not only completes the transaction but adds considerable value.”
How We Can Help
Johnson and Boon regularly advises on commercial land sales, development transactions, and overage agreements. If you are considering selling land or negotiating development-linked arrangements, our Commercial Property team can provide clear, strategic advice tailored to your objectives.
Technical Case Study: Commercial Land Sale with Overage and Development Triggers
Overview
Johnson and Boon advised a commercial landowner on the sale of a significant development site to a national residential developer. The transaction involved complex overage mechanics designed to capture future uplift in value arising from a change of use and residential development, while preserving the purchaser’s ability to implement the scheme.
The matter required careful structuring to address existing title constraints, legacy overage provisions, and future planning-led value creation.
Site and Transaction Profile
- Asset type: Commercial land with development potential
- Transaction value: Multi-million-pound disposal
- Proposed use: Change of use from commercial to residential
- Existing interests: Leasehold interest nearing expiry
- Planning status at completion: No residential planning permission granted
Legal and Commercial Risks
From a developer and agent perspective, the key risks identified were:
- Overly restrictive overage provisions inhibiting funding, disposal, or development
- Ambiguity in drafting leading to disputes over trigger events
- Risk of overage being unintentionally triggered or avoided
- Interaction between overage obligations and planning strategy
- Title restrictions preventing onward disposal or security arrangements
Overage Structure
Johnson and Boon advised on the discharge of historic overage arrangements and the implementation of a new overage structure aligned with the development lifecycle.
Key elements included:
- Clearly defined trigger events linked to the grant of implementable planning permission
- Mechanisms to prevent avoidance, including restrictions on transfers and structuring
- Time-limited operation of the overage to balance certainty and value capture
- Drafting designed to remain funder-friendly and development-compatible
The overage was structured to ensure that additional consideration became payable only where genuine planning uplift was achieved, rather than at earlier or speculative stages.
Negotiation and Drafting Strategy
Negotiations focused heavily on the wording of the sale contract and transfer documentation. Particular attention was paid to:
- The definition of planning permissions capable of triggering overage
- The treatment of phased or amended planning consents
- Permitted disposals and exclusions for group companies and funders
- Enforcement mechanisms without stifling development
The drafting required a detailed understanding of both development practice and market norms to ensure the provisions were workable in practice.
Post-Completion Renegotiation
Approximately two years post-completion, the parties revisited the overage provisions due to evolving commercial considerations and the purchaser’s development strategy.
Johnson and Boon advised on restructuring elements of the overage to allow development to proceed while maintaining the seller’s entitlement to value uplift. This demonstrated the importance of building flexibility into overage arrangements from the outset.
Outcome
- Successful completion of the initial land sale
- Protection of seller’s long-term financial interests
- Overage provisions capable of renegotiation rather than dispute
- Development progression facilitated without compromising value capture
Practical Lessons for Developers and Agents
This case study highlights that:
- Overage provisions can be structured to be development-enabling rather than restrictive
- Early legal input is critical when assessing development land with future planning potential
- Clear, technical drafting reduces the risk of disputes and delays
- Flexibility and commercial realism are essential in long-term development transactions
Our Commercial Property Expertise
Johnson and Boon regularly advises landowners, developers, and agents on development land transactions, overage structures, option agreements, and planning-led disposals. Our approach combines technical legal expertise with a deep understanding of development and funding realities.