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Easements with utility companies - don't get caught out

View profile for Kurren Nischal
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After purchasing your site and securing planning, you will inevitably start construction. Part of the construction process may involve a utility company coming onto the site and laying down services, as some sites will lack access to water, gas, electricity, or other utilities.

As future purchasers would expect access to certain utilities, it is usually necessary to spend time and money assessing the availability of utilities on your site in advance. If you find some utilities are absent, you will need to contact the relevant utility company and establish a route upon which the missing utility should be laid down. After this process, the time will come to agree the legal aspects with the utility company. Here we give a few common hazards of utility easements that you as a property developer should know about.

Parties

If the site is in an urban area, the nearest mains connection will be nearby. It is not uncommon however to have the nearest mains some distance away. In this case the utility company may need to lay services on third party land, requiring this third party landowner to a party to any agreement with a utility provider.

Mains Connections

Agreeing an easement with an extra party involved may take more time (and it is likely that you will have to pay their professional costs), so to avoid delays in the project we recommend starting conversations with them early on. If the third party landowner is the person who will sell you the development land, be sure to include provisions in the transfer stating that they must agree to grant easements over their land to any utility companies who wish to service the site.

Lift and shift

You may wish to move the services at a later point in time, as you may want to re-configure the site or increase the number of units. Provisions in an agreement which allow for this are called “lift and shift” clauses. Utility companies can initially leave these clauses out of an agreement as it is an extra burden on them to have to come back to the site and lay down new services and remove the old ones. If they are absent, we recommend you ask for these provisions to be put into the agreement. It is likely each utility provider will have their own standard provisions, but these are likely to include:

  • How much time they can take in getting back to you with a quote for relocation
  • Whether the utility company must physically remove the water, electric or gas lines or if they can simply decommission these and render them out of use
  • Whether they must approve of any new route that the services should take

Indemnity

Indemnity provisions state what happens if there is any damage done to the land when laying down any services. Make sure that any agreement states what happens in this case, otherwise you may be adding a hefty bill to your project costs. These provisions may include:

  • Whether the utility company should be given the chance to make good any damage done first, before compensating you
  • What kind of damages are covered, such as any claims made against you by third parties, or losses arising out of the delay in making good the damage
  • How “strict” the indemnity is. Should you be compensated for any damage at all, or only damage that was reasonable and that could have been foreseen?

Tree preservation orders

Local authorities may make a tree preservation order (a “TPO”) to prevent anyone from damaging or removing trees which they may consider to be historic or valuable. The utility company usually requires a provision to chop any trees on the site if it is necessary to lay down or maintain the services in the future. The agreement will provide these rights, but you should make an exception for trees under a TPO.

Time taken to complete the agreement

Besides navigating potential pitfalls, it is also important that utility easements and similar infrastructure agreements are put in place quickly. Prolonging these could slow down the development, potentially affect the development programme and ultimately resulting in additional costs. It is important to have an experienced solicitor who is familiar with these agreements and can deal with them quickly and efficiently.

We are currently working on several high value schemes and have negotiated and agreed:

  • S104 and S98 sewer adoption agreements
  • Easements with gas and electric companies
  • S38 and S278 road adoption agreements
  • Option agreements over sites composed of plots held by multiple landowners
  • Acquisitions of sites involving overage

At Harold Benjamin, we have a specialist property development department with a variety of clients, ranging from independent developers to multinational corporations. Contact Huseyin Huseyin today if you would like legal assistance with any part of your project.

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