When a site with potential for re-development comes up for sale in a highly sought-after area, it is inevitable that it will attract a lot of interest and anyone wishing to acquire the site has to move quickly. This is particularly so if the seller decides to make potential buyers submit to a contract race, where the winner will be the first to confirm that they are in a position to proceed via the exchange of a binding sale contract.
This was the scenario that a new developer client of ours found themselves in when a former care home in the affluent Hertfordshire town of Radlett came up for sale, which they and several other developers were keen to secure.
‘The only way your client is going to be successful is if you can get them to a point where they are ready to exchange before anyone else can.’
Acting for the client was Ingram Winter Green’s experienced property lawyer and partner, Michael Compton, who explains how he was able to ensure the client got what they wanted and paved the way for the care home to be demolished and replaced with a block of flats:
‘When a seller decides that they want prospective purchasers to submit to a contract race, you know immediately that the only way your client is going to be successful is if you can get them to a point where they are ready to exchange before anyone else can.’
‘This means that you need to be organised and know what you are doing, particularly when it comes to carrying out pre-contract enquiries and searches to ensure that the site is sound from a legal perspective and that there is nothing amiss that might thwart the development plans that have been devised.’
Fortunately for the client, this was not the first contract race Michael had been involved in and so he was able to hit the ground running. He quickly identified the checks that were needed urgently, and those that could wait, then got them ready for exchange within a few days. His tenacious approach resulted in the seller agreeing to go with them rather than one of the competitors.
As Michael goes on to explain:
‘On the ‘must do’ list were the commissioning of an environmental report to rule out possible contamination issues which could have made the site unsuitable for residential use, together with a utilities report to locate and map out underground infrastructure which might have been difficult to avoid and costly to re-route.’
‘It was also imperative to obtain indemnity insurance to buy out the risk posed by historical restrictive covenants which purported to limit the use to which the site could be put and which could therefore have derailed the project if someone had sought to enforce them.’
It was also imperative to obtain indemnity insurance to buy out the risk posed by historical restrictive covenants
For those unfamiliar with indemnity insurance, it is a specialist product that provides cover against the risk of a restrictive covenant being successfully relied upon to prevent a development taking place and which will typically reimburse the developer their losses.
However, it is only usually available where planning permission has been granted. In this case the site was being acquired by our client on spec, which meant that it was incumbent upon Michael to use his knowledge of the market to find a provider who was willing to issue a policy without planning permission being in place.
Fortunately, this is something he was able to do and combined with positive results from the reports that had been commissioned, this gave the client the reassurance they needed to commit to the purchase ahead of their rivals and thereby seal the deal.
This was a fantastic result for our new client who was delighted. It is also testament to Michael’s expertise in this area and his reputation for being able to secure sites for clients in the face of stiff competition and under immense time pressures.
Need our help?
If you are a property developer looking for an experienced lawyer with a ‘can do’ attitude, why not give Michael Compton a call on 020 7845 7408 to see if he can assist?
Michael can also help if you are a property dealer or investor and whether you require support in making an acquisition or disposal, resolving a straightforward or complex land law matter or managing landlord and tenant relations.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.