Boundary disputes over plot plans are a common issue that can have costly implications and cause delays. Tina Khanna, conveyancing director of RG Law, shares some simple steps that can help avoid wasted costs and delays in the lifecycle of a development
The legal boundary may correlate precisely with the physical boundary, but it could just as easily run along one particular side of a structure or hedge. For example, it may include all or any part of an adjoining roadway, footpath, stream, or ditch. On the other hand, a physical boundary might have no resemblance to the legal boundary whatsoever and may have been erected well inside or outside the legal boundary.
Example case:
Earlier this year, we were instructed by a purchaser of a new build property where a late discrepancy was revealed in the plot plan. During the transaction, a plan was provided for the property which reflected the true boundaries of the plot on the ground and was agreed by our client.
However, in preparation for exchange and as part of a final file review and pre completion searches with the land registry, it was revealed that part of the garden included in the plot plan was not actually owned by the developer. This small section of land had been transferred in error from the developer to a third party with a different plot sale.
The Developer’s Solicitors exerted a lot of pressure to complete the transaction regardless of this issue using the original plot plan. This was based solely on their, reassurances that this would be resolved post completion. However, we had to balance this alongside acting in the best interests of the client and mortgage lender.
The client had to be carefully advised of the repercussions of proceeding to exchange of contracts without this area of land being included. Whilst the developer’s solicitors had provided reassurances around this, the legal position at the time of exchange would be that this small parcel of land, that fell within the physical boundaries of the property they were purchasing, was no longer owned by the developer. Hence it would not be included in our client’s purchase transaction.
The solution was for a new plan to be agreed that did correspond with the legal position and the small area had to be removed from the revised plan. This new plan needed to be approved by the client’s mortgage lender and the client needed to be advised clearly and carefully of the true and current boundaries of the property. Once resolved the transaction could complete safely with the client and their lender fully protected.
Key considerations:
When a developer plans to sell off-plan sites, the proposed master conveyance plan should be submitted to the Land Registry for “estate boundary approval.” This approval provides certainty that the boundaries of all plots fall within the developer’s legal title. Conveyancers acting for purchasers will expect to see estate boundary approval within the sales pack. If the same underlying location plan has been used throughout the legal and planning process, no discrepancies should be revealed.
If material discrepancies are revealed, potential solutions should be considered. These may include:
- Asking the Land Registry to update its mapping and issue a revised title plan or map search detailing.
- Obtaining indemnity insurance.
- Resubmitting or revising the planning consent.
- Negotiating with adjoining owners (usually the last resort).
Another major issue is the changes from initial paperwork pre-exchange to post-exchange. For example, parking spaces being reassigned, necessitating amendments and updates to all leases. Supplemental agreements are required to reflect these changes in the exchanged contract. These agreements serve as additional documents to the contract, maintaining all terms post-exchange while listing any agreed-upon variations.
Sometimes, it may be better to finalise all details before rushing to exchange, rather than having to correct errors or variations later. For instance, ensuring that plot access rights or other critical details are fully understood and confirmed before exchange can prevent later disputes.
Increased communication with the developer’s solicitors before completion day, with earlier confirmation of any outstanding issues well before the completion date, would be advantageous.
To reduce the risk of disputes over plot plans, it is important to consider several factors, including clear communication, accurate documentation, and adherence to legal standards.
Steps to reduce risk and disputes:
1. Accurate Plot Plan Documentation:
• Ensure that the plot plan is drawn to scale, showing accurate dimensions and boundaries.
• Include all relevant features such as roads, utilities, easements, and existing structures.
2. Legal Compliance:
• Verify that the plot plan complies with local planning regulations, building codes, and any other relevant legal requirements.
• Obtain all necessary permissions and approvals from local authorities before proceeding with the build.
3. Clear Communication:
• Maintain transparent communication with all stakeholders, including buyers, contractors, and local authorities.
• Provide detailed explanations of the plot plan to all involved parties, ensuring they understand the layout and any potential restrictions.
4. Professional Survey:
• Engage a qualified surveyor to confirm the accuracy of the plot plan and boundaries. A professional survey can help prevent boundary disputes.
5. Contractual Clarity:
• Include detailed descriptions of the plot plan, boundaries, and any potential changes in contracts.
• Specify how disputes will be resolved in the contract, using mediation or arbitration clauses if necessary.
6. Insurance:
• Consider taking out insurance to cover any potential disputes or legal challenges that may arise from the plot plan.
7. Dispute Resolution Mechanism:
• Establish a clear mechanism for resolving disputes, such as involving a neutral third party or using a specific legal process.
