The term overage means where a seller is trying to obtain part of any increase in the value of the property after that property has been sold to the buyer.
The two most common situations where overage arises are:
This will depend on the drafting of the overage provisions in the agreement and are negotiated between the parties. Any payment will be triggered by certain events that are set out in the agreement. Typically these events include:
This will be set out in the overage provisions in the agreement. This will be typically expressed as a percentage of any increase in value of the property after deducting various expenses paid by the buyer. The provisions will set out how the value of the property is to be valued and should also cover how to resolve any dispute as to the value and/or the overage payment.
A particular difficulty with overage obligations for the seller is ensuring that the buyer is liable to make any payment due.
There are many ways that the seller can attempt to secure and protect their interest, with this being a point for negotiation and discussion. Each method has its own advantages and disadvantages and care must be taken to ensure the seller has the protection they require.
Some of the more common ways of securing overage obligations are:
If you need any advice on overage, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
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