Anna MacLeod, Solicitor with Murray Beith Murray, writes in the autumn edition (September 2019) of Scottish Land & Estates LandBusiness magazine.
Read the full article below:
Any development opportunity, be it small-scale conversion of existing farm buildings or commercial plot sales, will require a great deal of design, planning and preparation before ground is broken.
At the outset, negotiations with the Planning Department of the relevant local authority, architects and surveyors will inevitably take priority. However, at this early stage it is also important to consider the title conditions that may ultimately be imposed on each plot or unit to secure the amenity and good management of the development, and in particular whether it is appropriate for these title conditions to be contained within a deed of conditions.
Frequently used by landowners and developers, a deed of conditions is a document that sets out the rights and obligations of the eventual owners of each plot within a development.
Ideally for the landowner or developer, the document is put in place once the plans for the development are finalised but prior to the sale of the first plot or unit. This enables the developer to retain control of the terms of the title conditions, thus avoiding potentially lengthy and costly negotiations with purchasers. However, developers must keep in mind the ultimate marketability of the plots or units, and avoid title conditions that may appear unduly onerous or restrictive. Creating a simple deed of conditions to regulate matters such as access, services, boundaries and use provides potential purchasers with clarity from the outset. If the plots or units within the development are to be marketed for sale, the Sales Particulars should identify that a deed of conditions is in place and a copy can be made available by the selling agents.
Whilst there will be an initial outlay for the preparation and registration of a deed of conditions, this will be recouped in the long term as the conveyance of each plot would simply incorporate the deed of conditions by reference. Provided that matters have been carefully considered, there should be no need to create further title conditions in each individual conveyance, and thus the conveyancing procedure is more straightforward from the outset.
Following the introduction of the Land Registration etc. (Scotland) Act 2012, the Registers of Scotland have adopted stringent mapping requirements and it is likely that a new plan will require to be prepared which is suitable for registration. Once details such as the location of the access road, the plot boundaries and service routes have been tied down, the plan preparation can be instructed. Frequently, this is based on the plans submitted for Planning Permission, since this simplifies the process.
Much like the preparation of the deed of conditions itself, whilst there is an initial outlay payable, the same deed plan is usually also attached to the Disposition of each plot, thus avoiding the need to have individual plans of each plot prepared and reducing costs in the long run.
If a developer opts not to enter into a deed of conditions, for example if the layout of the development is not tied down at an early stage, then title conditions must be created on a case by case basis when each plot is sold. The disadvantages of this are threefold.
First, the purchaser’s solicitor will be involved in the adjustment of the Disposition, and thus the negotiation of title conditions can become protracted. No two transactions are the same, so whilst the selling solicitors can aim for consistency for the title conditions affecting plots within the same development, this is not necessarily guaranteed. Second, such negotiation can lead to increased costs that may not be foreseeable at the outset of a transaction. Finally, if planning requirements change between the sale of plots, for example in relation to the creation of visibility splays over neighbouring property, this can lead to further conveyancing work requiring the co-operation of the adjacent plot owners. There is always the risk that this may not be forthcoming and unless reciprocal rights are required, the developer will usually be obliged to cover both parties’ legal costs in exchange for the grant of rights.
The use of deeds of conditions for developments is generally to be advised as they provide certainty for both buyers and sellers in addition to simplifying the conveyancing process, two outcomes which are very much worth the upfront time and effort required. When planning a development, a deed of conditions is a good deed done.
At Murray Beith Murray, our rural property lawyers have considerable experience drafting deeds of conditions for developments of varying sizes. If this article has raised any questions, or you have a legal matter that you would like to discuss, please get in touch using our Contact Form or call us on 0131 225 1200 to speak to one of our specialist solicitors.