Real Estate Talking Points: Overage - the essentials and how to protect yourself
"Overage – sometimes called “clawback” or “deferred consideration” – is used in real estate transactions to share increases in value after land has changed hands and allocate financial reward (and risk) between sellers and buyers. In short, overage is a right for a seller to receive additional payment from a buyer if the land purchased subsequently rises in value. For the seller, overage is a means of maintaining an economic interest in land after it has been sold. To the buyer, an overage obligation may be preferable to paying more for the land upfront, based on a hypothetical future uplift in value."
In this alert Jack Shand summarises the essential legal principles relating to Overage and what can be done to protect yourself.