When you purchase a property, understanding the legal and planning obligations attached to it is essential. One key element that often appears in a Local Authority Search is a “Section” Agreement which can affect both the property and future owners.

These agreements, which include Section 106, Section 38 and Section 104 Agreements are legally binding contracts between developers, local authorities and other stakeholders. They ensure obligations like road maintenance, sewer adoption, or community contributions are met. For homebuyers, knowing what a Section Agreement means can help prevent unexpected liabilities and make the property purchase process smoother.

When you purchase a property, your Conveyancer will apply for searches which include a Local Authority Search, Water and Drainage Search and Environmental Search. If you are buying in a coal mining area, your Conveyancer may also request a coal search. In this article I will discuss the various entries on your local search.

What is a Local Authority Search?

The Local Authority Search is an application made to the Local Authority to search their records for anything that may affect the property. It will reveal planning permission for works completed and any work undertaken under the competent person scheme, together with other information that may burden the property such as whether the property is located in a conservation area, subject to Tree Preservation Orders (TPOs), and if there is a public footpath nearby.

It will also reveal “Section” Agreements. What does this mean to the Buyer?

There are 3 types of “Section” Agreements

• Section 106 Agreement
• Section 38 Agreement
• Section 104 Agreement

All agreements are legally binding and can be enforced against each party and usually contain a provision to include their “successors in title”, or future owners.

These agreements are usually entered into by the landowner, developer and Local Authority or stakeholder. They include certain provisions that the developer must comply with in order for the Local Authority to grant planning permission for the development, or for roads or sewers to be adopted.

They are registered as a Local Land Charge which is an official register that the Local Authority keep to record restrictions, obligations, and charges which affect the land or property. Each one is dealt with in more detail below.

Section 106 Agreement

A Section 106 agreement is a legally binding contract between planning authorities and property developers and made under section 106 of the Town and Country Planning Act 1990 (as amended). The purpose of an agreement is to ensure developers take into account certain local issues that will improve both the built and social environment for all residents.

For example, better infrastructure such as roads and utilities, environmental enhancements, affordable housing provision, and/or community facilities. The developer agrees to certain obligations from the planning authority which will benefit the local environment in return for the Local Authority to grant planning permission for a new housing development.

Section 106 Agreements are legally enforceable to ensure developers fulfil their commitments. The Agreement may contain a provision that binds future owners. This means if the developer has not fulfilled their obligations under the Agreement, the planning authority may enforce the provisions against individual plot owners.

If the Agreement does include a provision to bind future owners, your Conveyancer will either request the Seller’s Conveyancer to contact the Local Authority to ensure that the obligations have been satisfied, or that they will not take legal action against plot owners. Alternatively, an indemnity policy can be offered to protect against the risk of future enforcement action being taken.

Section 38 Agreement

Made under the Highways Act 1980, this is an Agreement between the developer and the Highways Authority (usually the County Council) which requires the developer to carry out various obligations before the local highways authority will adopt the road. It usually contains a bond or surety, which is a legally binding agreement that guarantees the developer responsible for making up the road to adoptable standard will fulfil their contractual obligations often putting aside a pot of money that can be used by the Highways Authority, or a guarantor who will step in, if the developer is no longer able to meet its obligations.

Until the road is adopted, it will remain private and the responsibility of the developer to maintain. There is usually a provision in the transfer deed from the developer to the first owner of the property that they will maintain the road and make it up to adoptable standard.

Once the road is adopted the parties to the Section 38 Agreement are discharged and the agreement is satisfied, although it may still appear on the local land charges register.

Section 104 Agreement

A Section 104 Agreement is similar to a Section 38 Agreement in that it is a legal agreement between the developer and, this time the water and sewerage company to adopt the sewers on the development. The agreement is made under the Water Industry Act 1991. The developer will be required to maintain the sewers until such time that the sewage provider adopts the sewers and responsibility will then transfer to them. Again, a Section 104 Agreement is very often supported by a Bond or Surety.

Until the sewers are adopted it will remain the responsibility of the developer to maintain. There is usually a provision in the transfer deed from the developer to the first owner of the property that they will maintain the sewer and make it up to adoptable standard.

Once the sewers are adopted the parties to the agreement are discharged and the agreement is satisfied, although it may still appear on the local land charges register.

How Timms Can Help...

Planning can be a complex area for a any purchaser to understand. At Timms, we aim to explain in clear, plain language to ensure our clients can make an informed decision about the property they are purchasing. Ifyou would like any further information, our residential conveyancing team are here to help. Please feel free to contact me give me on 01283 561531 or email r.gibbs@timms-law.com. For more information, visit our Conveyancing webpage here.