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  • Barnes Property

Overage Clause

Overage….. No not Over Age …..Overage or Claw-Back or Uplift, they are all a mechanism for a vendor to benefit financially from a future increase in the value of the property they are selling as a result of certain criteria - for instance if the buyer achieves planning permission.

They are messy and complicated and they can extend the conveyancing process by several months, which costs both sides more money and doesn’t do much for goodwill in what can be quite a difficult process. The pros for overage clauses are supposed to be that the buyer pays less initially for the property and the seller future proofs asking less but the reality is it can end up costing everyone quite a lot more.

If you are still set on allowing one of these clauses to be part of your deal at least make sure that:-

1. There’s an allowance for cost deductions ie planning process costs that should be deducted from the final settlement.

2. Beware the payment trigger date, if it is as soon as Planning is granted the buyer could have huge cash flow problems

3. Agreeing Fees both parties need to be clear to avoid complications and delays.

4. Think about whether it would be easier and cheaper to buy or sell out the clause. It will speed up the transactions and save money

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