Project: London Acreage
Simulated Land Purchase & Development Case Study
A commercial and residential real estate solicitor handles land acquisition and development by balancing legal due diligence, risk mitigation, and commercial strategy.
Client
Apex Urban Developments Ltd
Property & Size
5-Acre Site, Borough of Barnet
Purchase Price
£12,500,000
Proposed Scheme
120 Residential + 2 Commercial
Task 1: Title & Ownership Due Diligence
Property Law
Goal: Verify clear ownership and identify restrictions that could halt development.
Key Solicitor Responsibilities
- Land Registry Search: Review the Official Copy of Register of Title (Form Title No. NGL982341).
- Restrictive Covenants: The title reveals a 1920 covenant stating: "No trade or business causing noise or nuisance shall be carried on upon the land."
- Rights of Way & Easements: An adjoining landowner claims an unregistered right of way across the northern boundary for vehicular access.
Student Exercises
- Covenant Risk: Determine if a mixed-use development breaches the 1920 covenant. Suggest two legal remedies (e.g., obtaining Restrictive Covenant Indemnity Insurance vs. applying to the Upper Tribunal under S.84 Law of Property Act 1925).
- Rights of Way: Draft a requisition on title asking the seller’s solicitor to clarify the legal basis of the neighbor’s claim (prescriptive right vs. formal grant).
Task 2: Local Authority & Environmental Searches
Public & Environmental
Goal: Assess planning status and environmental liabilities.
Key Findings from Searches
- CON29 / Planning: The site sits within a designated Conservation Buffer Zone. Planning permission (Section 106 Agreement) requires 35% affordable housing and a £450,000 contribution to local infrastructure (CIL - Community Infrastructure Levy).
- CON29M / Environmental Search: Historical site use was an iron foundry. High risk of heavy metal contamination in the soil.
Student Exercises
- Contaminated Land Strategy: Under Part 2A of the Environmental Protection Act 1990, the "polluter pays." If the original polluter cannot be found, the current owner becomes liable. Draft a clause for the Sale Contract requiring the Seller to indemnify the Purchaser against historical contamination remediation costs.
- S.106 Planning Obligations: Outline the key milestones where S.106 funds must be paid to ensure the client’s cash flow isn't disrupted during construction.
Task 3: Contract Negotiation & Structuring
Commercial Law
Goal: Protect client funds prior to obtaining full planning consent. The client wants to secure the land now, but does not want to complete the purchase unless full planning permission for the 120 residential units is granted.
Options for Structuring the Transaction
- Option A (Conditional Contract): Binding agreement to buy if planning permission is granted by a specified long-stop date.
- Option B (Option Agreement): Pays an option fee for the exclusive right to buy within 24 months, with no obligation to buy if planning fails.
Student Exercises
- Structure Selection: Recommend whether Option A or Option B best protects the developer's capital while locking out rival bidders.
- Overage Clause: Draft bullet points for an Overage Provision (a mechanism where the seller gets an additional payment if the buyer re-zones the land later for higher density, e.g., 150 units instead of 120).
Task 4: Finance & Completion
Banking & Conveyancing
Goal: Coordinate bank funding and legal transfer of title.
Key Elements
- Development Facility: A commercial lender (Barclays Commercial) is providing a £8,000,000 development loan, secured by a First Legal Charge over the property.
- Certificate of Title: The lender's solicitors require a formal City of London Law Society (CLLS) Certificate of Title confirming there are no defect titles before releasing funds.
Student Exercises
- Lender Protection: List three key disclosures that must be highlighted to the lender in the Certificate of Title regarding the site's environmental history and covenants.
- Completion Checklist: Put together a sequential checklist for Completion Day (e.g., executing TR1 form, transferring purchase funds, paying Stamp Duty Land Tax (SDLT), and submitting Form AP1 to HM Land Registry).
