Outcome Page
Practical and commercial considerations on acquisition 2
Investigation of title 2
Joint ventures in commercial developments 2
Environmental searches and enquiries 4
Contaminated land 4
Protection against environmental liability 5
Acquisition contracts 10
Conditional agreements for sale 12
Planning conditions 13
Planning obligations 17
Community infrastructure levy 18
Breach of planning controls 20
Methods of planning enforcement 21
Options for procurement of a design, construction and management team 25
Third party rights in relation to defects in construction or design 30
Collateral warranties 31
Agreements for lease 32
Repair obligations 32
Insurance 33
Service charges 35
Rent review provisions 40
Page 1 of 43
,Practical and commercial considerations on acquisition
Cost of developing the site
- Include environmental contamination
- Is the land sufficiently stable?
- Funding considerations
- Drainage/utilities
Timescale for development
- Include planning applications
- Environmental clean up
Consider the actual development
- Layout of new buildings
- Proximity to infrastructure
- Proximity to urban centres
- Access to the site
Investigation of title
IDEA structure
Searches and enquiries1
See real estate notes
Joint ventures in commercial developments
Joint venture partnerships
- 2 or more companies carrying on a business in common with a view to a profit [s 1 PA 1890]
- Advantages
o Easy to enter into
o Flexible
o Sharing risk equally
o Partnership Act and implied terms can help provide certainty
o Additional expertise of partners who are fully involved in the business
- Disadvantages
o Arises on statutory definition being met, not by agreement
o Partnership disputes
o Unlimited liability for partners
o Lack of clarity, particularly with the risk that the Partnership Agreement hasn’t
accounted for all possibilities
o Lack of input from one partner
o Joint and several liability
o Partnership property disposal subject to taxes – you cannot dispose of the
partnership itself as an entity very easily
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Page 2 of 43
, o Each partner has own tax liability – no corporation tax
o All partners can bind the partnership if they have apparent or actual authority
Special purpose vehicle company
- A company set up for the purpose of the development
- Advantages
o Limited liability
o On completion of the development, the shares in the SPV can be sold instead of the
land itself, which is tax efficient for the buyer, allowing the seller to charge more
o Easy for others to invest by buying shares
o Better suited to short-term developments with one property, instead of multiple
- Disadvantages
o Liable to corporation tax on any rental income or capital gains
o Shareholders also liable to pay income tax on dividends and CGT on sale of shares,
meaning there are two charging points to tax
o Administration requirements such as accounts, meaning lack of privacy
o Charge to SDLT when SPV first acquires property
Joint venture contract
- Contract governing the relationship of co-developers
- Advantages
o Flexible and responsive to parties’ needs (bespoke agreement)
o No need to transfer property to new entity, so no SDLT and the developer can retain
full ownership
o Tax transparent
o Less likely to have liability for another party’s actions
- Disadvantages
o Unlimited liability
o Unable to sell the JV as a company/going concern
Page 3 of 43
, Environmental searches and enquiries2
Environmental desktop search
- Searches through databases and maps of present and historical land use, pollution incidents,
flood risks, regulatory enforcement, and neighbouring uses
- Often fully or partly automated
Environmental surveys
CPSE
- Sets out details of any:
o Historic, present or potential pollution incidents, hazardous substances,
enforcement actions or complaints by third parties in relation to environmental
matters at the property
o Environmental permits, licences, consents held or required for the property or any
activity at the property
CON29, enquiry 3.13
- Any contaminated land notices affecting the property
- Entries on a register maintained under s 78R of the EPA 1990
- Any consultation with the owner or occupier of the property before the service of a
remediation notice
- A negative reply from CON29 can mean:
o There is no contamination
o The site has not been inspected
o The inspection has not been completed
o The level of pollution is not high enough
o No conclusion about the site has been reached
Contaminated land3
Definition [EPA 1990 s 78A(2)]
- Any land which appears to be in such a condition, by reason of the presence of substances,
that:
o (a) significant harm is caused or there is a significant possibility of such harm being
caused; or
o (b) significant pollution of controlled waters is being caused or there is a significant
possibility of such pollution being caused
- Harm is defined as harm to the health of living organisms or other interference with the
ecological systems of which they form part, and includes harm to property [EPA s 78A(4)]
- There must be a significant contaminant linkage
Significant contaminant linkage4
- A significant contaminant (pollutant)
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3
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