Webinar
Real Estate: Obtaining vacant possession and the impact on land development
Real Estate: Obtaining vacant possession and the impact on land development
The term “Vacant Possession” is one of the most commonly used terms in real estate, but when buying land for the purposes of redevelopment, how to obtain vacant possession on completion, is an issue that should be considered by landowners, developers and promoters at an early stage. In this webinar we take a look at:
- When to consider vacant possession in long term land promotion
- What affects the land and the ability to give vacant possession
- Agricultural tenancies
- Commercial tenancies
- Wayleaves and telecoms
- Undocumented occupiers
- Prescriptive rights
- Timescales for vacant possession and the impact on development
Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us and you can view past webinars at SHMA®ON DEMAND.
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Webinar transcript
(Please note this is auto-generated and un-edited)
0:40
Hi, and thank you for joining this session on issues that may around arise, around obtaining vacant possession of development land. I tend to act on long term strategic projects, but the points I'll cover in this session are also relevant to more immediate land acquisition and disposal for the element. In real estate. Giving vacant possession means that the land or property is occupied in any way unusually they can session is required on legal completion of a sale.
1:15
In particular, what development is intended? It is important that they can possession will be given by the landowner to ensure that the purchaser can begin that redevelopment works without any hindrance. So the first point that arises is when should a developer, or promoter, or the landowner, need to consider vacant possession. And my response would be that they should think about it as soon as possible.
1:43
Even in long term options and promotion agreements, which may run for 10 or 20 years, the party should consider who is on the land before they exchange their agreement and what might cause delays in obtaining bacon possession once the planning commission has been granted.
2:01
And the developer wants to exercise its option in long term projects they might need to be reconsidered again at the planning stage. So, when a developer actually puts in the planning application, and then, again, before, act, size of the auction, or if you're taking the land to the market for sale. In the case of promotion agreement. So what might be going on on the land? That needs to be considered.
2:29
Firstly, there could be agricultural tenancies affecting the land. The first point to consider is, what type of agricultural tenancy affect the land is an oral or written? And could it be a tenancy arrangement under the Agricultural Holdings Act 1986 or a farm business tenancy under the Agricultural tenancies Act 1995.
2:53
In both cases, there are procedures to go through to obtain possession under an agricultural holding that tendency. The procedure can take some time. The landlord or the landowner has to serve, notice to quit, and the tenant can oppose the termination. The onus is on the landowner to specify a ground for possession can't just expect the tenant to vacate the property. Usually for development, the ground that they would make out is under case beings, which is that the land is required for a use other than agriculture.
3:32
The landowner must establish the case, so for example, it will assist if a planning permission has been granted for residential or commercial development. But if opposed by the tenant, it will be for the first tier tribunal to decide whether the case has been made and this will have time and cost implications, including potentially paying compensation to the tenant.
3:57
The thumb business tenancy is an easier to bring to an end.
4:02
There might be a break clause in the agreement, allowing the landlord to bring the tendency to an end on a fairly short timeframe where the farm business tendency is for two years or less, than any length of notice period can be given in the agreement. But if the tendency was for more than two years, at least 12 months notice to quit must be given by the landlord landowner. If a fixed business tendency has come to an end, but the tenant has remained an occupation, the tenancy will automatically continue from year to year, as what's known as an annual periodic tenancy. And any notice to quit in those circumstances will skip at least 12 months notice prior to the anniversary of the date of the tenancy. So as you can see, even if you can get possession, there are some timescales that the developer, the promoter, and the landowner needs to work with.
5:01
There may also be commercial, business tenancies affecting the land. If there is an occupier under business lace, it's important to check whether the lease has been contracted out of the Landlord and Tenant Act 1954. If it hasn't, or the arrangement is all, the tenants will have security of tenure to continue to occupy unexpired of the lease term. Taken possession may not be possible without negotiation.
5:31
Even if the lease is contracted out of the 1954 Act, and therefore does not have security of tenure at the end of the lease term, you need to consider when the lease term actually ends and whether that fits in with the development timescales.
5:47
There's a break clause, how and when can it be exercised, and how much notice must be the landlord gift? So it's really important that you get your legal advisers to have a look at any documents of title, any leases, and specifically to think about those break clauses as well as when the lease actually comes to an end.
6:08
Leases or licenses may also have been granted to telecoms operators. The Landlord and Tenant Act 1954, which we've just talked about, and no longer applies to telecommunications leases. But telecoms operators do have security of tenure under the Electronic Communications Code, which was essentially updated in 20 17. And it is not possible to contract out of such legislation. So even when the license or lease agreement comes to an end, the telecoms operator has the ability to leave their equipment on that site through the security of tenure provisions.
6:49
So, they can retain their operators on the site, and to terminate, the landowner must give at least 18 months notice to the operator.
7:01
The London are also has to provide a ground for possession, which can include redevelopment. The telecom operator can oppose the notice on the basis that they don't want the agreement to come to an end and can then apply to court on the and to remain in possession.
7:20
The law, it's them for the landowner to make out if the ground for the ground for opposition to the court. And the court is satisfied. The ground has been made out, will bring the agreement to an end, but this process can take some time and telecoms operators may want some comfort that there is an alternative sites on which the operators can be located in this world of telecoms and Internet access. We all want to have access to Wi-Fi, as much as possible. So it's a real issue for telecoms operators.
7:59
Even if the lease to the telecoms operator was entered into before the 2017 Code, there are transitional provision Gins in the code that may apply. And you should seek advice as to what the requirements are and who notices need to be served on. For example, if the site has been sublet, that could be more than one Telecom operator in possession, notices would need to be served on all the parties. It's no good necessarily just serving on the party who's named in the lease, if part of it has been subject to another telecom operator.
8:35
They would also have exactly the same rights to stay in possession.
8:41
There may also be wayleave agreements affecting the land. Wally, in themselves aren't generally permanent, but some way leaves may be protected by statutory legislation. So, for example, if it relates to electricity operators, the electricity at 999 will apply. An electricity provider can delay removal of their apparatus, even if there was a termination clause in the agreements, until it finds an alternative suitable location. Or if there is no alternative, it might able to make the Wally permanent.
9:16
Usually in redevelopment and negotiation can take place between the developer and the electricity provider, but a party is not obliged to negotiate, and it can lead again to delays in the ability to develop.
9:32
It's always important to obtain replies to inquiries from landowners and carry out a site inspection. As I've mentioned, there may be oral tenancy arrangements in place and undocumented occupy as well. There is nothing in writing. It can be difficult to establish notice periods required in order to obtain possession, And I'd recommend anything of Greed Orally is put on a formal written footing to avoid any uncertainty uncertainty and any dispute when it comes to obtaining possession site. Inspection should also reveal whether there are any issues with trespassers and use by the public, which will help the parties establish whether a village green application is a possibility, or whether there's access of Community Bali issues that may apply.
10:25
Developers should also consider who will be a party to the contract. And if the site includes a residential dwellings, are all the adults who are over 18 who live in the proxy a party to the contract. Even if they are not named on the title, documents to the proxy. Adults who are living in a property may have rights to stay an occupation and should be asked to be a party to the agreement to give their consent and confirm that they will vacate the property on completion.
10:56
Finally, I wanted to mention prescriptive reich's, these are rights that are not referred to entitle documents, but may apply and affect registered or unregistered land.
11:09
It could be a rights of way or right of drainage, front adjoining property, for example. If someone has been exercising a right as of right, which means without secrecy and without permission for a continuous period of at least 20 years, which can include uninterrupted use by a series of successes in title, a prescriptive rights may have been acquired.
11:37
Person who's lung benefits, from a prescriptive, right? does not have to apply its land registry to register the right or the easement as it's known. But they may do so. What title is registered, land registry will consider making an appropriate title entry to protect that prescriptive, right? That's usually based on a statement of truth or statutory declaration, given by the person owning the benefiting land. And, again, possibly the previous landowners to be able to claim the 20 years that the prescriptive easement that's necessary.
12:16
It's worth noting that there is no ability to vary the rent of a prescriptive, right?
12:21
So if someone has the benefit, or land has the benefit of a right of way, there is no ability for a developer to vary that rent or lift and shift, as it's sometimes referred to, without the consent of the benefiting landowner.
12:40
And again, any consent to a variation would have to be by negotiation and would need to be properly documented by way of deemed.
12:51
So, this isn't an exhaustive list of possible vacant possession issues. There may be others, but this gives you a flavor of some of the more difficult issues that may need to be addressed when buying or selling development land. Parties will need to consider how much time may be required to obtain bacon possession, which may affect the completion date and delay commencement of development. Usually, the onus is on the landowner to sell with possession but the developer or the promoter will need to be alive to the potential timescales. And if negotiations are ongoing to reach a subtle termination of a lease or a license, the developer or promoter may want to lead on those negotiations.
13:37
Or if the landowner needs, because they may have the relationship with the tenant, the developer or promoter, may want the ability to step in if the negotiations are not going to plan. And they may want the ability recorded as part of the contractual agreement.
13:56
Parties should also consider the effect tenancies may have on the price payable. If the price has been agreed, does this take into account the delay, or lack of vacant possession, and what the developer want the opportunity to be able to buy the land subject to the tendencies, and deal with possession issues themselves post completion? What costs are likely to be involved in doing that, including compensation payments that may be required to be paid?
14:25
The contractual documentation between landowner and developer or the promoter will also cover any new tendencies that may be granted. So, from the point of exchange to the point where completion happens, which, as I said at the outset, could be 10 years down the line. Between long term options and promotions, the landowner may need the ability to grant some forms of tenancy whilst the land is being promoted. And the developer or the promoter might be quite happy to allow the landowner to grant, for example, short-term farm business tendencies or grazing licenses, or even short-term contract it out, commercial leases. But the developer or promote may also want the ability to approve the documents before they are entered into to check right close arrangements, timescales and to make sure they can get on site to carry out investigations linked to the promotion of the site during the course of their agreement.
15:23
As I mentioned at the outset, it is sensible for all parties to take X but legal advice on the potential issues that may arise. So that when it comes to completion, there are no surprises that might lead to the landowners not being able to fulfill that contractual obligations to get vacant possession or for the developers and promoters. In terms of the timescales we're working team might be involved. That's just a brief overview of this topic, but if you would like any further information on any of the areas that have been discussed in today's webinar, please don't hesitate to contact our team of experts in development at Shakespeare Martin. Thank you very much for tuning in.
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