Ed John and Hollie Wright round up the key strategic legal issues that developers have to resolve during site assembly.
A large number of developers have taken the decision to mothball sites pending the end of the Covid-19 outbreak. Nonetheless, there are some resolutions on the critical pathway of a development which can be progressed, whether or not work on site is ongoing.
It is not uncommon for developers to focus on obtaining planning permission and vacant possession of land, which are essential stages of a development. Nonetheless, there are other legal issues which should not be overlooked. Site assembly can be a minefield for developers, particularly in urban environments where the rights of neighbouring landowners are more easily affected by development because of development density. Here, we set out a list of the more common issues that developers should consider.
Rights of light
This type of easement can be acquired in a number of ways, but the most common is by receiving light through windows for a period of 20 years or more under the Prescription Act 1832. A new development larger than the building(s) it replaces will sometimes impact the rights of light of neighbouring land. It is prudent to obtain advice from a specialist rights of light surveyor and solicitor at the outset so that a strategy for dealing with any rights can be employed. This can include negotiating with affected parties or registering light obstruction notices. It is essential to be aware of and deal with these issues from an early stage. A party that enjoys a right of light may be entitled to obtain an injunction against an infringing development, stopping work on site and possibly requiring a cut-back to the scheme before works can continue.
Electronic communications equipment
If the development land has existing telecommunications equipment in place, that equipment may well have protection under the Electronic Communications Code, the most current version of which was introduced on 28 December 2017. The Code gives formidable rights to telecommunications operators at landowners’ expense: they can require landowners to allow communications apparatus to be installed in their chosen location, and impose security of tenure which can make them difficult to remove at short notice. Certain criteria must be met and the process can take anywhere from 18 months to three years or more if the removal is opposed by the operator. A development can also be affected if there is equipment on adjacent land with Code rights, and rights of access over the neighbouring land or the public highway required to carry out development works interferes with any electronic communications apparatus.
Party walls
The Party Wall etc Act 1996 provides a statutory procedure for neighbours who share a boundary to carry out building works. The Act applies to works to the shared “party wall” or structure and to certain excavations within either three or six metres (depending on certain criteria) of the adjoining land. Unless all parties agree, a “third surveyor” will usually be appointed to inspect the adjoining property and make a “party wall award” which governs the works the developer can carry out, and documents the pre-existing condition of the adjoining property in case the works cause damage.
Boundary disputes
Having a clear understanding of the boundaries of the development and neighbouring land is crucial. In many cases the boundary line will be clear and uncontested. However, boundary disputes can be tricky and Land Registry and Ordnance Survey plans can only be used as a general guide to boundaries and boundary features. There are a number of factors to be considered when determining a boundary, including the original conveyance of land and extrinsic evidence such as features on the land. Any claims of adverse possession of land should also be considered as they may change the legal boundary line.
Nuisance
Development can cause noise and vibration that affects those on neighbouring land. In serious cases it can constitute a common law public or private “nuisance”, which is actionable by a claim for an injunction and/or damages. For some types of development, usually those in which the neighbouring land comprises sensitive, very high value or architecturally significant properties, it can be appropriate for a developer to proactively agree a neighbourly matters agreement with the neighbouring owner, to set the parameters for permissible noise and vibrations during the development, and timing of the works (if not already provided for in a party wall award). Acoustic and vibration specialists can be engaged to monitor the works and procedures can be put in place to prevent any nuisance beyond the agreed limits.
Easements
A thorough review of the title documents is key to understanding any easements to which the land may be subject. This desk-based review can include rights of way by foot and vehicle, the right to lay and maintain utility pipes, drainage and rights of structural support from adjacent land or buildings. The release of any such rights that will be interrupted will need to be negotiated with the dominant land owner to avoid a risk of injunction or damages claims. In addition, it should be considered whether any easements will be required for the development, such as drainage and utilities, and the negotiation of these factored into the development timeline.
Stopping-up orders
The proposed development may require existing public highways to be stopped up, particularly where a crane and/or scaffolding is to be installed. Under section 247 of the Town and Country Planning Act 1990, it is possible to apply for a stopping-up order. However, a stopping-up order will not override any private rights of way and therefore the title deeds should also be reviewed carefully.
Restrictive covenants
These can restrict development of land without the prior approval by the owners of the land with the benefit of the covenant. Where a development is hampered by a restrictive covenant and the owner of the covenant is not willing to consent to the development, an application can be made to the Upper Tribunal (Lands Chamber) under section 84 of the Law of Property Act 1925. The applicant must satisfy one of the section 84 grounds, which include that the covenant is obsolete, it impedes a reasonable use of the land, there is express or implied consent or that no injury will be caused.
Leasehold restrictions
If the land being developed is leasehold, it should be confirmed that there are no restrictions in the lease that prevent the intended development and use. Leasehold restrictive covenants are also subject to section 84 of the 1925 Act, but only where there is a lease term of more than 40 years with at least 25 years of the term unexpired.
Access to neighbouring land
Some developments will require access to land outside the development site to carry out the works. For example, in a high-density area where the entire plot will be developed, scaffolding may need to be erected or cranes may need to oversail neighbouring land. Some access can be provided for by a party wall award, but in other cases, licences will need to be negotiated with the neighbouring landowner(s) as to the rights required.
Trespassers
If a site is empty for any period of time, perhaps while planning approval is awaited, it is at risk from trespassers. On-site security and concrete bollards preventing access to vehicles are common preventative steps. If trespassers do enter on to the land, swift action should be taken to remove them to limit damage such as fly-tipping. A common law eviction by certificated enforcement agents (formerly known as “bailiffs”) may be sufficient. In cases where damage to persons or land is occurring or is anticipated, an urgent possession order can be sought from the High Court. It is also possible to seek preventive injunctions from the courts, before any trespass has occurred, if the land is at a real risk of trespass. Injunctions and urgent applications, including trespasser possession claims, are still currently being heard at court by video conference.
How to deal with these issues
Our advice to developers is to take a holistic approach to prospective projects, taking into consideration the entire suite of potential issues with third-party rights as early as possible. By approaching developments in this way, it is often possible to devise a strategy for dealing with the issues in a practical way to ensure that the project runs smoothly when works start (or restart).
The key to managing third-party rights successfully is to think and plan ahead from an early stage. Accurate information is fundamental: developers need to find out as much as possible about the potential issues. This will often mean having the right professional team on board to obtain the requisite information – for example, by obtaining a full report on title with searches. Developers should set clear lines of communication with (and between) their professional advisers, formulate a clear risk-minimising strategy and review that strategy regularly.
Can the steps required to overcome issues be priced into the development? How will it affect the timing and key stages of the development? Can co-operation provisions be incorporated it into any sale and purchase agreement?
If a particular issue or issues is/are a deal breaker, it may be prudent to negotiate a conditional sale agreement with the buyer, pending the satisfactory resolution of that issue. Alternatively, retentions from the purchase price can give protection until unquantifiable risks become known and quantified.
Insurance products can be useful tools for anticipated problems or where developers have limited scope to deal with the issue before proceeding. Understanding insurers’ requirements is essential. Developers should check any proposed terms carefully and make sure they will be fit for their purpose. It can be helpful for brokers to liaise with the developer’s professional team to ensure the strategy aligns with the insurers.
If the project is being financed by a third party, do they require consent to your strategy or have oversight? What onward sale or other exit is in contemplation? If so, will the strategy in place give them comfort?
Many solicitors and surveyors firms now have specialist neighbourly rights teams with the expertise to advise developer clients on the complex matrix relating to developments and third-party rights. Even though those professional teams are working from home at present, they can make a meaningful and valuable contribution to the progress of even a mothballed development.
Ed John is a partner and Hollie Wright is an associate at Howard Kennedy LLP. This article was written with the assistance of members of Howard Kennedy’s Neighbourly Rights Group
