If you are considering selling land for development, there are a number of legal and practical issues which you should consider to ensure that your land is “sale ready”. Addressing these issues early on in the process could help to maximise value and ensure a smoother and quicker sale process, ultimately saving you both time and money.
Is your land title registered at HM Land Registry?
Title to most land and property in England and Wales is now registered at HM Land Registry (LR). Each piece of registered land has its own unique title number, and each title number has a register which contains, amongst other things, details of the matters benefitting or burdening that title (such as rights of way, restrictive covenants or mortgages). An associated title plan shows the extent of the land within that particular title.
However, there are still some areas of land to which title remains unregistered. This means that LR does not hold any information about the extent of the land and who owns it. Dealing with a sale or purchase of unregistered land is generally more time consuming and therefore costly from a legal perspective. Investigating an unregistered title is a dying art and developers/buyers much prefer a registered title.
First registration process
We recommend that you check whether your land is registered at LR and if not, you apply to register it before selling. We can help you with this process which is called “an application for first registration”.
An application for first registration is rarely straightforward and it can take several months, and often over a year, for LR to process so early action is advised.
It may be that some of the relevant deeds or documents have been lost or destroyed. If this is the case, you may need to make or obtain from others statutory declarations about the land, its ownership and use etc. to achieve first registration of your title.
There is no guarantee that LR will accept an application for first registration or that LR will give an unqualified title.
Do you own all the land you want to sell?
You should inspect the land and walk the boundaries to ascertain whether there are any signs of encroachment or any boundary issues. For example, are all the boundaries clearly marked on the ground, and do they accord with the legal boundaries as identified on the LR title plan?
An encroachment or boundary discrepancy may be material if, for example, it compromises the proposed access to a development site.
Can you legally sell your land for development?
Your land may be subject to various rights, restrictive covenants or other limitations which impact on any sale and potential development. Investigating the LR title to your land (assuming it is registered) will identify problematic rights or covenants etc.
There may also be matters which are not recorded at LR but which restrict your land such as for example rights which have been acquired by third parties through long usage. Such matters may be discoverable from a physical inspection of the land.
Matters relating to your land which could impact on a sale or development are called “title defects” and can cause delay and therefore increase costs for both parties on a sale. Many title defects can be satisfactorily addressed by putting in place an appropriate indemnity insurance policy although it does take time to source an appropriate policy and the developer/buyer will expect the landowner to pay. However, not all title defects can be insured and may, for example, require third party co-operation to resolve.
We therefore recommend that, working with your agent and solicitor, you try to identify any legal obstacles to sale or development so that an appropriate solution can be identified. If that solution is indemnity insurance, then it may be sensible to obtain a few quotes in advance of any sale to demonstrate to the buyer that the relevant issue is insurable. If the solution requires third party co-operation, you may need to agree a strategy with the buyer before making any approach to the relevant third party. Remember that you may preclude the availability of indemnity insurance for a particular issue if you approach an interested third party, so you need to be very careful!
Can you use your land pending sale?
It is advisable to continue to farm or maintain land even if you are planning to sell it. Active farming or maintenance will prevent new wildlife habitats forming which could prove problematic for development. The land being actively used may also prevent or discourage trespassers.
Is your land occupied?
If you have occupiers or businesses using all or part of your land, you should review the relevant occupational documents to ensure that you will be able to obtain vacant possession at the appropriate time. Different regimes apply depending on the nature of the occupier and the type of agreement in place. You may need legal advice to ascertain the position on each and to be clear as to what action you should take and when.
Is your land used by the public?
Are there any other people who use the land? For example, is the land used by dog walkers or for other recreational purposes? Are there gates onto your land in the fences of adjacent houses? If so, we recommend legal advice to ascertain the status of such uses, the risk of designation as common land or as a town and village green and whether any steps can be taken to mitigate such risks.
To prevent any new uses being created, active management of the land with adequate fencing and appropriate signage stating the land is private property and prohibiting access will help.
Do you have suitable access to your land?
Does your land immediately abut an adopted highway at the point of the proposed access? If there appears to be a gap this might be a LR mapping error which can be rectified, or it may require appropriate statutory declarations and indemnity insurance to satisfy a buyer.
Are you retaining any land?
If you intend to retain any neighbouring land you should think about what rights (if any) you may need over the land being sold as these will need to be expressly created (reserved) in the transfer to the buyer.
For example, you may need:
- rights of access;
- rights to use and repair existing services;
- rights to use new services laid within the land sold.
Any necessary rights should be addressed at heads of terms stage as should any covenants to be imposed on the buyer such as:
- obligations to erect and maintain boundaries;
- prohibition of any particular use;
- construction, maintenance and adoption obligations in respect of access and services.
Can you answer pre-contract enquiries?
Pre-contract enquiries will be raised by the buyer’s solicitor as part of the due diligence process, and you will need to answer these and provide any relevant supporting documentation. You could be liable for misrepresentation if you provide inaccurate replies, so this exercise needs to be taken seriously. Enquiries in relation to development land are usually very extensive and time consuming so the sooner you make start this task, the better.
Conclusion
You should appoint at an early stage both an agent and a firm of solicitors with the appropriate expertise and experience to deal with a development land sale and to advise you appropriately.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
