Development and the Law

Development and the Law Godfrey Bruce-Radcliffe is a development lawyer with extensive experience of all parts of the process. His aim in this book is to widen the perception of those professionals concerned with construction and development and dealing with the resultant asset and whose role is, sometimes quite consciously on the part of the employer/client, confined by an almost ‘need to know’ basis of instructions. Godfrey Bruce-Radcliffe is a partner in Thomas Eggar, specialising in the development of commercial property. He is a familiar conference speaker and has written a number of books on property development. Also available from Taylor & Francis Property Development, fourth edition D.Cadman and R.Topping Spon Press Understanding JCT Standard Building Contracts, seventh edition David Chappell Spon Press Adapting Buildings for Changing Uses David Kincaid Spon Press Dictionary of Property and Construction Law J.Rostron, Linda Wright, Laura Tatham and Robert Hardy Pickering Spon Press Information and ordering details For price, availability and ordering visit our website http://www.tandf.co.uk/ Alternatively our books are available from all good bookshops. Development and the Law A guide for construction and property professionals Godfrey Bruce-Radcliffe LONDON AND NEW YORK First published 2005 by Taylor & Francis 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Taylor & Francis 270 Madison Ave, New York, NY 10016 Taylor & Francis is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to http://www.ebookstore.tandf.co.uk/. © 2005 Godfrey Bruce-Radcliffe All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. This publication presents material of a broad scope and applicability. Despite stringent efforts by all concerned in the publishing process, some typographical or editorial errors may occur, and readers are encouraged to bring these to our attention where they represent errors of substance. The publisher and author disclaim any liability, in whole or in part, arising from information contained in this publication. The reader is urged to consult with an appropriate licensed professional prior to taking any action or making any interpretation that is within the realm of a licensed professional practice. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-48563-7 Master e-book ISBN ISBN 0-203-60034-7 (Adobe e-Reader Format) ISBN 0-415-29021-X (Print Edition) Contents Preface v 1 The players. Or: who do you think you are? 1 2 Joint ventures. Or: can I join in too please? 13 3 Development and forward funding agreements. Or: now, let’s really party! 25 4 Forward sale, loan and occupational tenant agreements. Or: and here’s how 44 the others do it 5 Site assembly and elements of land law. Or: what have we here? 54 6 Interpretation and some statutory hurdles. Or: how to invite trouble? 69 7 Construction procurement in the development process. Or: before you build a 84 house of cards, first get a pack 8 When it all goes wrong. Or: fallback in action 101 9 The management of risk. Or: ‘tis better to be safe than sorry 116 Index 136 Preface When I was invited to write this book, I thought that rather than make assumptions about what it should contain, I should first canvass views from people I knew and had worked with, and sometimes opposite, in the property industry. I was delighted that so many people replied with their views. Most interestingly, as the replies began to arrive, it soon became clear that people’s views were falling into two broad camps. The first of these, and noticeably the smaller, focused on statutory and regulatory issues as affecting them in their daily work. Construction and property professionals featured almost exclusively in this grouping. The need for this book thus became clear almost immediately, because the property industry view which clearly prevailed was that the need was quite different. All construction and property professionals receive, to a greater or lesser extent, a measure of legal instruction as part of their professional training. The planning system, building regulations and so on come to mind immediately. Of course, it might be interesting for a professional to see what someone other than his or her tutors has to say, perhaps in the context of the interaction between the various functions of the professionals involved in the development process, but for the most part it would only be repetitive. However, what clearly emerged from the canvass was the need for construction and property professionals to be drawn more closely into the development process itself, to focus on the web of legal interaction, and to be aware of their effect upon it and, in turn, its effect upon them. One of the most telling replies I received was from Allan Chisholm, late chairman, Lend Lease Europe Limited and, with his kind permission, part of his letter is reproduced: One area where I feel there is at times a lack of understanding is the breadth of legal issues involved in the development process. In particular, the way any one of these can throw the project off course is not always appreciated. Equally the long delays created by the legal procedure getting into difficulty are not always understood. This can result in insufficient attention being paid to these legal hurdles in the early stages of the development programme. I consider that, although it is not practical for property professionals, other than lawyers, to understand the complexities of the legal process, it is important to have a general appreciation of what is required and the risks involved. The above encapsulates the purpose of the book, namely to introduce the reader to supervening and often overriding aspects of development which his professional training will not so readily yield, and to expose some further rationale for his involvement and in particular the activities and requirements of others. That he himself has certain specific skills goes without saying, of course. Much of the material may be seen as the opposite of expectations. For example, Chapter 8, ‘When it all goes wrong’ suggests default and dispute in building contracts, but in substance it is not, so read on. It is thus the very antithesis of most of what is taught, and views the world from the perspective of the employer and all those associated with him. For the construction professional, ‘development’ may often mean, incorrectly, the construction process itself, or at best procurement. Here is a site, the architect has prepared drawings for planning purposes, planning permission has been obtained, and the professional team are now closely involved in working up the scheme. Assisted by the quantity surveyor, the developer is seeking tenders for the construction contract. More specialised professionals are engaged because of the needs of the development, e.g. environmental, mechanical and electrical, archaeological consultants, and so on. From nowhere at all, well, actually, from the developer’s solicitors, draft professional appointments and a variety of warranties appear. The professional team have not worked with this particular developer before. Why are the appointments in this form? What is the catch? The construction professional reaches for his professional indemnity (PI) insurers, or if he can afford it his own solicitors. The developer complains of time wasting, and says his funding is being held up. On top of this, the quantity surveyor receives from the developer’s solicitors a raft of amendments to the chosen form of building contract. Why are they saying this or that? Has the developer told the solicitor nothing about the project? Is the developer close enough to the construction process to know how to instruct his lawyers? The solicitor admits that he has seen some draft employer’s requirements, but otherwise that he is only aware of the location of the site (because his firm dealt with the conveyancing). His firm has also advised on some awkward conditions in the planning permission and on a draft section 106 agreement, but beyond being told the contract sum and (probably without being told why or invited to comment) the desired form, he hasn’t a clue (and so it is with everyone else involved), and somehow the threads need to be drawn together. If the solicitor is deprived of the benefit of his client’s thinking, or that of his professional team as the case may be, chances are that his client is working on misplaced assumptions. However, strangely, the quantity surveyor hasn’t asked how it was he was instructed in the first place (and neither has any of the rest of the professional team). No disrespect to him, the fact he was instructed at all is not the issue. That was the good news. The bad news is that he is probably not being instructed by a money bags developer at all. The name is familiar and reputable, ah yes, Bloggs Limited. But what’s this? Bloggs (Neasden) Limited. Same company? Answer, no. Does an association of names imply an association of legal liability? Answer, no. It may be a wholly owned subsidiary of Bloggs but it is not Bloggs.

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