What can you do if it doesn`t work as intended with respect to the s.106 agreements? Gary Soloman explains. Are buyers of homes in new buildings responsible for breaches of an S.106 planning obligation (including financial contributions) that relates to residential construction? The legal tests for when you can use an s106 agreement are set out in Regulations 122 and 123 of the Community Infrastructure Levy Regulations 2010, as amended. As soon as a developer becomes aware that they are unable to fulfill the obligations arising from a Section 106 agreement, they should contact the LPA and attempt to meet or modify the commitment. For example, it could try to reduce a necessary contribution or negotiate a later trigger date for the payment. See practice note: Renegotiation of planning obligations. In the event of a breach of its obligations, the Authority may take direct action and claim costs. In the case, it was an obligation within the meaning of Article 106 to pay 75% of the costs of the motorway works necessary to allow a mix of employment and residential construction. After the first building permit, two subsequent building permits were issued, each time involving the same commitment. At the time of the shutdown, there was no construction on site, even though Council had built the road and the landowner had paid about one-third of the money owed as part of the commitment. Modern practice of contract design, in accordance with Article 106, normally excludes buyers of individual dwellings (and lenders of each house) from the liability of some or all planning obligations. This is usually because the local authority recognizes that houses or dwellings might not be able to be exploited if a right could be invoked against the owner. However, this issue needs to be examined very carefully, since not all planning obligations contain the corresponding exclusion clause and there may be restrictions on the application of an exclusion clause. Courts often examine situations where, despite the best efforts of the drafts for opinions, unforeseen events occur at the time of the conclusion of an agreement under Section 106, which complicates the interpretation of the agreement.
This summer, the courts gave some useful tips on how they should be interpreted when parties are faced with the unexpected. . . .