Promotion Agreements – 10 things for landowners to think about

For Promoters such agreements offer an opportunity to share in the profit made by selling land with the benefit of planning permission.

Once planning permission is obtained the Seller is legally bound to sell the land. Such agreements need to cover many issues, not least because of the length of time that may be required to secure a planning permission. Below are ten key issues all landowners should consider before entering into detailed negotiations with developers:

1. The degree of control and involvement which they want in the project (which may be exercised either directly or via a Consultant).
2. Ensuring that the scheme only proceeds provided that a minimum land take or a minimum value is achieved.
3. Ensuring the land is to be sold to a third party following the grant of planning permission rather than to the Promoter.
4. Determining whether (and if so the basis upon which) the Promoter can introduce other land in the ownership of third parties into the area being promoted for planning.
5. The degree of control they want over any changes in the party undertaking the promotion obligations, either within its own group of companies or to a new and separate third party.
6. The ability to terminate the agreement or to take over particular obligations of the Promoter if the Promoter is in persistent or substantial default of the agreement.
7. A timetable of the Promoter’s obligations so that both parties are clear what is expected.
8. The right to use the land as freely as possible while planning is promoted and obtained without prejudicing either obtaining planning permission or a subsequent sale of the land for full value.
9. Protection of the use, value and future development potential of the land which is not sold for development after planning is obtained.
10. Protection of the development potential of any adjoining land outside of the Promotion Agreement.