Unpaid s.106 agreement - community options? - Public forum - Planning Advisory Service (PAS)
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Unpaid s.106 agreement - community options?
I represent a Parish council which supported an application for residential development partly on the basis that 12 affordable units would be provided and s.106 money in 2 tranches of £47k and £54k would be paid. 1st tranche was due prior to occupation of the affordable. Affordable was occupied 12 months ago and developer defaulted on the agreemnt. Work on tranche 2 has not been started due to developers difficulties in raising finance. Local Authority did nothing to pursue money until 10 months after initial due date. But have since issued a 'last chance' invoice and their debt recovery team have been in to the developer and concluded there is unsufficient funds to cover the money owed at present. Our understanding is that a new agreement is being negotiated between the council and developer that will pay the initial s.106 in stages during the development of tranche 2. Enquiries as to who holds the current affordable title remain murky. There is a suggestion the developer still holds the title despite occupation and control by an RSL. We are 'twitchy' about a new agreement with a developer who has aleady reneged on one agreement. We feel decisions are being taken rather over the heads of the local community to the benefit of the developer while we remain the only real losers. Parish councils have the power if necessary to take legal action on behalf of the local community. What advice would you give us?
All S106 agreements should be renegotiated if they are unviable, if the agreements is over 5 years old I could probably get it removed altogether so the developer could move on unhindered and perhaps even make a small profit. I have no idea why communities and LA's think developers are some sort of cash cow, those days are over I'm afraid. Is it not better to make sure that a new agreement is entered into which is drafted properly? Assuming the LA's lawyer knows how to write a watertight agreement, 99% of the S106 paperwork I see is fatally flawed, it only takes one word to make it so. Ultimately it is for the LPA to decide what is an acceptable contribution but if you need a second opinion you need to call in a lawyer who understands these matters, they are few and far between.
I am sorry to hear that Russ. As you'll see from my email address I am a lawyer and I hope I am one of the few and far between ones Evan describes. (You can check my credentials on the Keystone Law website.) He is right that there are quite a lot of s.106 agreements which are less well drafted. You will need to get hold of the agreement and see what it actually says. Some agreements will prohibit occupation of more than x dwellings until the payment is made. Section 106 agreements generally run with the land so persons deriving title are liable as well. But as I say, it all depends on how the agreement is written. And you will also need to persuade the LPA to take enforcement action. They have quite a good armoury, including injunctions. David
Hi Evan, Why have you made reference to a Five year period and removal of the 106 agreement, i thought the agreements were open ended, and as David said also move with the land owner should the initial developer move on?
Thanks David, I've got a copy of the agreement. First tranche was payable prior to occupation of the affordable - which didn't happen. Company is now in receivership. Current land title is unclear, but clearly occupied by the RSL. Could we go after the RSL for the money? I've also heard it said that going bust is no way to avoid payment - particularly as the "Estates' part of the group is going bust, but the "Homes" part is currently renegotiating with the LPA. Evan I worked for 10 years for an architects firm that dealt exclusively with national housebuilders. I can sympathise with the sentiment to an extent - we were often held to ransom over 106 payments, but at the end of the day, land appraisals are done with the 106 money in the balances. Regards Russ My thinking is that if they are renegotiating, at the very least we should be lobbying the LPA to ensure the first tranche is paid up front before commencement of phase 2. At the moment it sounds like they're going to accept a gradual release of funds as the phase is developed.
Hi mark, missed your post somehow. I'm involved in the modification and discharge of S106 planning obligations, in a small number of cases it will be renegotiation but very few of those I have come across are watertight, as one PINS Inspector called it they are 'fatally flawed'. Although LPAs will use the 5 year card the government 'encourages' them to revisit the agreements if it can be proved that the scheme is unviable. After 5 years it is open season as far as I am concerned, I read what it says and then take it on if I am 80% confident it will come off. I focus on local occupancy, it is punishing locals for being.. er.. local. I have removed S106 obligations from whole estates this year. *************** Russ I also worked for an architect back in the 70's before this 'blackmail' began in earnest. Clarity of title is essential. Spending money on injunctions against insolvent and unknown parties is a bit of a gamble.