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Overage | What is it?


An overage is a mechanism which allows a seller of land to benefit from an increase in the land's value following the sale.

It is a clause in legal documents which allows the seller to clawback some of the lost profit where land is developed and planning permission granted after completion. Planning permission and development will increase the value of the land. This is value the seller would otherwise lose.

Overages are complex and you should always take legal advice before committing yourself to a document containing an overage clause.

Where an overage affects your property this will make it less attractive to many buyers and lenders.

An overage will be beneficial to a seller but not to a buyer. It will apply indefinitely or for a set period as defined in the clause.

You cannot avoid the Overage payment unless released from it by a legal deed, and generally some payment is required.

Take care with overages. Speak to an expert before exchanging as you are then legally bound.

Read more here…


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