Landowners - Can You Actually Rely on a Verbal Agreement?
A recent legal case highlights why you should always ensure that informal agreements are properly documented and recorded at the Land Registry.
What Happened?
The case concerned three terraced houses on New Street. 147 had a right of way over 149 and 151.
The owner of 149 and 151 saw a development opportunity for a block of flats at the rear of the gardens, and bought part of the garden from the other owner.
An informal agreement was reached to remove the right of way. However, the developer delayed taking the necessary steps to remove the right of way from the titles to the properties.
When the developer eventually contacted the owner to arrange the formalities to remove the right of way, they found that the property had been sold and the new owner was unwilling to agree the removal of the right of way.
The developer argued that the previous owner's verbal agreement should be enforceable against the new owners.
The dispute went to court, where it was held that the right of way was properly registered against each of the titles to the properties and therefore was enforceable. It was significant that there was no formal application to remove the right of way when this was agreed with the previous owner.
3 Takeaways for Landowners
- Ensure that any informal agreements relating to land are confirmed in writing and signed by both parties.
- Where appropriate, include an obligation on one party to ensure that the agreement is registered or any change in rights are documented at the Land Registry as soon as possible.
- Check if there are any formalities that should be complied with and seek professional advice.
For more information please contact Aditi Sawjani in our Commercial Property team on 01923 919 319, or complete the form below.