The Perils and Pitfalls of Land Sales

19th September 2019

What are the reasons why buyers often don’t proceed with purchases of land?

When it comes to farmers and landowners selling land, what are the circumstances which would put off buyers or make a seller unable to sell?  Here, Tracey Jackson, Associate and Chartered Surveyor at H&H Land & Estates outlines the obvious and less obvious pitfalls of selling land and property.

For land with “potential”, you first need to check that there are no pre-existent Occupancy Restrictions, Overages or Restrictive Covenants. We are coming across more and more confusing, and poorly drafted restrictive covenants and overage clauses due to their historic nature, sometimes going back many decades.

An overage clause is the means through which a seller may be entitled to receive further monies after completion, in some cases these can be as high as 75% of the uplift in value. If the purchase was based on redevelopment potential, the buyer would be reluctant to progress as most of the profit gained from the planning permission and development would go straight to the previous owner.  Overages should be fair for both parties to encourage a good sale price and the incentive for the buyer to have enough potential to accept the overage.

Retention is another area that can cause problems, for example for commercial sporting arrangements on the land. Where the seller has no control over the person accessing the land to exercise their rights, the buyer may not be impressed. If they have been retained by a previous seller, generations ago, this can cause serious problems.

Access over land is another problem area where there is often lack of clarity and key questions can’t be answered.  If the access isn’t owned to the property – who does own it? What are the maintenance provisions?  Is the right of access limited to agricultural use? If it is limited, this can cause problems for diversification away from agriculture.

Access isn’t limited to people or animals either, in a recent acquisition we had a problem when the water supply pipe over unregistered land had to be upgraded. As the exact line of the pipe benefited from an established easement, to over-come the issue, a complicated survey was necessary to trace the pipe and relay it in the same position to avoid the third-party owner claiming trespass. Access to water and water meters in third party land is also another.

Other issues with some serious consequences include: –

  • Failure to provide detailed records about repairs or installations
  • Tenancy issues, where a house, or land does not have vacant possession.
  • Stewardship schemes which you are passing on, is restrictive
  • Verbal agreements with your neighbours which haven’t been documented
  • Method of sale isn’t right for the buyer
  • Where planning permission issues haven’t been satisfactorily sorted out
  • Any structural issues which surveys are likely to reveal.
  • Boundary issues

Now finally, an obvious but important one that is a key deterrent for a buyer is when the guide price has been set too high by the seller, especially if the level is noticeably above current market values!  So, although marketing and selling property may seem a simple process it is important to minimise problems by ensuring any potential issues have been addressed in advance.