LEGAL REPORT Standard Life Assurance ( SL ) Taylor Wimpey UK Limited ( TW ) relating to Thornets House, Challenge Court, Leatherhead (the Property )

Transcription

1 LEGAL REPORT Standard Life Assurance ( SL ) to Taylor Wimpey UK Limited ( TW ) relating to Thornets House, Challenge Court, Leatherhead (the Property ) Eversheds LLP 115 Colmore Row Birmingham B3 3AL Tel: Fax: DX: Birmingham (Ref: woodsni/ ) Date:10 May 2013 BIR_PROP2\ \2 1

2 LEGAL REPORT Standard Life Assurance ( SL ) to Taylor Wimpey UK Limited ( TW ) relating to Thornets House, Challenge Court, Leatherhead (the Property ) This Report is prepared solely for the benefit of TW. 1. DEAL Property: Price: Thornets House, Challenge Court, Leatherhead shown edged red on the contract plan a copy of which is annexed as Appendix m plus VAT. We give no opinion as to the capital value of the Property. VAT: Deposit: SL s obligation: Payable. A deposit of 120,000 is payable on exchange of contracts as stakeholder. SL is required to: remove the reference to the Lease of Thornets House dated 25 April 1989 made between (1) Laing Investments Limited and (2) BTR Property Holdings Limited (the 1989 Thornets House Lease ) on the freehold title to the Property and provide an updated official copy evidencing that removal; close the leasehold Title Number SY in bir_prop2\ \2 2

3 respect of the 1989 Thornets House Lease and provide evidence from the Land Registry of that closure; and close the leasehold Title Number SY in respect of the sublease of the Ground and First Floors of Thornets House dated 29 April 2005 and made between (1) BTR Property Holdings Limited and (2) Docucorp Europe Limited and provide evidence from the Land Registry of that closure. SL has confirmed that this lease was disclaimed after the tenant went into liquidation. Completion is to take place on the Completion Date regardless of whether SL has satisfied this obligation. Eversheds may need to progress these matters if they have not been completed by the Completion Date. TW has confirmed this is acceptable. SL will need to assist with any requisitions which may be raised by the Land Registry after that date. Completion Date: 1 July 2013 Fees: Existing Premises: Existing Lease: Each party is to pay their own costs. Tyrell and Teazel House, Challenge Court, Leatherhead An underlease dated 14 March 2000 made between (1) BTR Property Holdings Limited and (2) Laing Homes Limited of the Existing Premises as varied by the Deed of Variation dated 18 February 2005 made between the same parties. A copy of the underlease and Deed of Variation are annexed as Appendix 2. Headleases: The lease dated 25 April 1989 of Tyrell House, Willowbrook, Leatherhead made between (1) BTR Holdings Limited and (2) Laing Homes Limited; and the lease dated 25 April 1989 of Teazel House, Willowbrook, Leatherhead made between (1) BTR Holdings Limited and (2) Laing Homes Limited A copy of each of these leases is annexed as Appendix PLANNING TW has not asked us to advise on planning matters. 3. DOCUMENATION 3.1 A copy of the Contract is annexed as Appendix 4 and TW should read it carefully. bir_prop2\ \2 3

4 Our comments below are not comprehensive and are not a substitute for TW reading the Contract. We have advised TW below of any important dates, for example, the completion date, but it will not be our responsibility to remind TW when these dates are approaching, It is an unconditional fixed price Contract. Unless we comment on a clause, it is straightforward or technical and satisfactory. Please note the following by reference to the clause numbering in the Contract:- Clause/Sched Commentary 2.1 TW s purchase of the Property is subject to SL s compliance with clause 2.3 (ie the removal and closure of historic lease of whole and sublease of part of Thornets House). However, TW is obliged to purchase the Property on the Completion Date regardless of whether SL has complied with clause 2.3 or not. Please see note above in paragraph 1 of this Report and clauses 2.5 and 2.6 of the Contract. 2.2 The Deposit is payable to SL s solicitors on exchange. 2.3 SL s obligations to remove reference from the freehold title and close the leasehold title of the whole of Thornets House which has been surrendered (a copy of the TR1 surrendering the lease is annexed as Appendix 5) and closing the leasehold title for the sublease of part of the Ground and First Floors of Thornets House which SL advises was disclaimed when the subtenant went insolvent. We will need SL s co-operation with any requisitions raised by the Land Registry if 2.4 Requirement that the parties are to enter into the Deed of Variation and Reversionary Lease (see our further comments on each document in paragraphs 3.2 and 3.3 of this Report respectively) on exchange of contracts. The Reversionary Lease is granted to enable TW to remain in occupation of the Existing Premises until TW has completed the refurbishment of the Property such that TW s staff can relocate to the Property and Reversionary Lease can then be terminated. TW will be liable under the Existing Lease for the remainder of the term in any event, ie until 28 September SL s confirmation that it has submitted its application in respect of clause (closure of leasehold title for sublease of part) and will not withdraw it. 2.6 Deals with procedure if SL has not satisfied the conditions in clause 2.3 by the Completion Date. bir_prop2\ \2 4

5 2.7 Contracting out provisions in respect of the Reversionary Lease (please see our comments in paragraph 3.3 of this Report in respect of the Reversionary Lease The Transfer of the Property is to be in the agreed form of Transfer which will be attached to the Contract. Please see our comments in respect of the Transfer at paragraph 3.4 of this Report. 5.1 TW is responsible for the Property from the date contracts are exchanged although please note our comments with regards to SL continuing to insure in respect of clause 5.2 of the Contract in the row immediately below. TW will still have to buy the Property notwithstanding any deterioration or damage which occurs between exchange and completion. TW has confirmed this is acceptable. 5.2 SL is to continue to maintain its insurance policy until the date the purchase of the Property is actually completed. A copy of the current insurance policy is annexed as Appendix 6). Please note that although not set out in the schedule of the insurance policy provided SL has confirmed that the policy includes a contracting purchaser s interests clause which covers parties who have contracted to purchase any building at the time the damage occurs or does so within a reasonable time of the damage occurring which is in the following wording: Contracting Purchaser's Interest Clause If at any time of any insured Damage or subsequent thereto in a reasonable period the Insured shall have contracted to sell their interest in any Building insured and the purchase is subsequently completed the purchaser shall be entitled on completion of the purchase to the benefit of this insurance on Buildings and Rent in respect of such Damage if and so far as the property is not otherwise insured by the purchaser or on their behalf without prejudice to the rights and liabilities of the Insured or the Company until completion. In respect of insurance on Rent where Damage has occurred prior to exchange of contracts and the purchase is subsequently completed the purchaser shall be entitled on completion of the purchase to the benefit of the Rent insurance to the same extent as the Insured would have if the Building had not been sold. 5.4 SL is to cancel the insurance policy on the date the transfer of the Property to TW completes. TW should therefore ensure that buildings and contents insurance is put in place on completion. 5.5 TW s obligation to prepare (at TW s cost) and send to SL a photographic schedule of condition of the Existing Premises as soon as reasonably practicable following exchange of contracts. These provisions also cover SL s obligation to respond within 10 working days of TW sending the photographic schedule of bir_prop2\ \2 5

6 condition on SL and deeming provisions if SL does not provide its approval or give detailed reasons why it will not approve the schedule. TW should ensure that there is sufficient time to get the photographic schedule of condition of the Existing Premises agreed before the lease of the Existing Premises expires on 27 September 2013 as this schedule determines TW s repair duties under the Lease on expiry of the lease of the Existing Premises or the Reversionary Lease (as applicable). 5.6 Expert determination provisions if there is any dispute in respect of the photographic schedule of condition. 5.7 Confirmation that TW s dilapidations liability for the Existing Premises is released on completion of TW s purchase of the Property and that TW will not be obliged to yield up the Existing Premises on expiry of the Existing Lease or the Reversionary Lease (as applicable in a condition which is materially worse than as evidenced in the agreed photographic schedule of condition. 6.2 The Property is sold with vacant possession. 10 Capital allowances provisions as agreed with advice from Helen Channer in our tax department. The SL contact with regards to any post exchange/completion queries relating to capital allowances is Vicky Campbell, contact number SL s obligation to provide to TW on the date TW purchases the Property a defective title indemnity insurance policy to cover the ambiguous rights referred to on title which may affect the Property. Please refer to our comments at paragraph 4.5 of this Report. 15 SL s obligation to provide to TW on completion all documents relating to the management and occupation of the Property. 3.2 A copy of the Deed of Variation to the Existing Lease is annexed as Appendix 7 and TW should read it carefully. Please note the following by reference to the paragraph numbering:- Clause/Sched Schedule Commentary This varies the service charge provisions in the Existing Lease to provide that TW is not obliged to contribute under the service charge for those works which SL as landlord has undertaken to the common areas of the estate, eg. lighting, boundary fencing, signage, landscaping etc. As the Reversionary Lease is by reference to the Existing Lease as varied, these provisions will carry through into the Reversionary Lease. bir_prop2\ \2 6

7 3.3 A copy of the Reversionary Lease is annexed as Appendix 8 and TW should read it carefully. The Reversionary Lease is broadly in the form of the Existing Lease except to change the term, break rights, exclude rent review and such other amendments to reflect the heads of terms. The Existing Lease is by reference to the Headleases the provisions of which have been incorporated into the Existing Lease notwithstanding that the Headleases are no longer in existence because they have merged with the freehold title and TW is now SL s immediate tenant and vice versa. In order to agree the Reversionary Lease with SL, the Reversionary Lease is by reference to the Existing Lease and we have not negotiated improved general terms other than as expressly agreed in the heads of terms for this deal. Eversheds takes no responsibility for the form of the Existing Lease under which TW is currently occupying nor the Existing Lease in so far as it has been incorporated into the Reversionary Lease under which TW will continue to occupy until TW exercises its break under the Reversionary Lease or the term of it expires. Please note the following by reference to the paragraph numbering:- Definition/Cla use/sched Premises: Commentary Tyrell and Teazel House, Challenge Court, Barnett Wood Lane, Leatherhead, Surrey, KT22 7LL shown edged red on the plans and the fire escape shown edged purple on the plans attached to the leases (please see the copy Existing Leases annexed as Appendix 2). Term: From 29 September 2013 until 28 September Principal Rent: Tenant only break right: 119,700 per annum plus VAT TW may terminate the Reversionary Lease on any date during the Term on one month s prior written notice. Security Tenure: of No the Reversionary Lease is contracted out of the Landlord and Tenant Act 1954 and TW is therefore not entitled to a renewal lease at the end of the Term. Parking Rights: TW has the right under each of the Headleases to use 15 car parking spaces in the Parking Areas which are shown edged blue on the plans to the leases (we only have black and white copies of the lease plans). The positions of these parking spaces can be changed by the landlord from time to time. Service Charge: The higher of: - 26% of the cost of SL Service Cost, ie the cost of providing the Services (set out in schedule 3 of the Headleases) and any bir_prop2\ \2 7

8 future expenditure SL anticipates spending during the unexpired residue of the Term; and - the Provisional Sum, ie the yearly sum SL estimates as the Service Charge. Alienation: Assignment of whole of the Premises is permitted provided SL s prior written consent is obtained (who may withhold consent if reasonable or impose further reasonable conditions prior to giving consent) and provided that TW gives an Authorised Guarantee Agreement in the form set out in the First Schedule of the Existing Lease and the new tenant covenants directly with SL to comply with the tenant covenants in the lease. There are further conditions which SL can require prior to consenting to an assignment of whole (set out in clause of the Existing Lease). Underletting of whole or any part of the Premises is prohibited. Alteration: Not to erect any new buildings on the Premises or any new structure outside any existing building or structure. Not to make structural alterations or alterations to the services. Not to make any other alteration without SL s consent (not to be unreasonably withheld or delayed but may impose reasonable conditions). Installing, removing or repositioning demountable partitioning may be done without landlord consent provided TW provides SL with two copies of the drawings and specifications of the work before doing the work and gives SL at least 14 days notice. Repairs and decoration: To keep the buildings and structures on the Premises in good and substantial repair and condition and to keep unbuilt on parts of the Premises adequately surfaced and in good repair and condition. Also to keep the Premises clean and tidy and free from rubbish and the unbuilt parts free from weeds and if SL reasonably thinks necessary and notifies to TW to replace any fixtures, plant, machinery or equipment which form part of the Premises with new articles of similar kind and quality. TW is to decorate the Premises within the last six months of the Term the internal and external parts of the Premises. These obligations are subject to the contractual provision in the Contract for the sale to TW of the Property and therefore TW is only obliged to deliver up the Existing Premises in a condition which is not materially worse than that evidenced by the agreed photographic schedule of condition. Insurance: SL is to insure subject to TW reimbursing see below. The cost of insuring the Premises. This is payable on demand. bir_prop2\ \2 8

9 3.4 A copy of the Transfer is annexed as Appendix 9 and TW should read it carefully. Please note the following by reference to the paragraph numbering:- Paragraph Commentary 12.3 SL s retention of rights over the Property: access on to the unbuilt upon parts of the Property to provide the Services; access onto the unbuilt upon parts of the Property in connection with the security of the estate; a right to use the Service Media in or under the Property to the extend that it serves SL s retained land; and a right at all reasonable times to use the 16 car parking spaces shown coloured green on the plan to the Transfer and rights of access over the roadways and footpaths to access those parking spaces. Please refer to the copy of the Contract/Transfer plan attached as Appendix 1. Services cover maintenance etc and lighting of the common parts of the Challenge Court estate including the estate roads, consultants fees, insurance of the common parts, managing agents fees and maintaining the common landscaped areas of the estate. As TW has agreed, TW will not receive any contribution from SL or its successors in title for the maintenance of the 16 parking spaces over which rights are granted in perpetuity nor as a contribution towards the maintenance over the roads and footpaths the vehicles will drive in order to access these parking spaces TW is to comply with the New Restrictive Covenant in respect of the car parking spaces shown coloured green on the plan to the Transfer, ie not to build on those parking spaces, prevent access to them etc TW is to comply with the New Positive Covenants covering boundary fencing, maintenance of the car parking spaces over which the rights are granted to SL, contribution to the cost of Services and estate regulations. TW is also to ensure that on any disposition any transferee or tenant taking a lease of more than 25 years enters into a deed of covenant with the owner of the Retained Land (the land shown edged green on the Transfer plan) to comply with these positive covenants Standard indemnity covenant for title matters relating to the Property given by TW to SL. bir_prop2\ \2 9

10 4. TITLE SL s indemnity covenant for all title matters relating to the remaining parts of the Estate The Property does not have any rights of light or air and the Retained Land may be developed so as to interfere with or destroy the access of light to and air to the Property A restriction will be registered against TW s title preventing dispositions by way of transfer or a lease for more than 25 years without a certificate certifying that the provisions clause have been complied with. 4.1 Estate and Ownership The Property is registered under Title Number SY SL is the registered proprietor of the whole of the Property with freehold title absolute. A copy of the title register and plan are annexed as Appendix 10. TW should check the plan carefully against its site survey and the Contract plan to ensure that the external boundaries coincide and that there are no gaps or ransoms. We cannot accept responsibility for the accuracy of plans that have been approved. Subject to obtaining clear title searches on completion, the title to the Property is good and marketable and free from adverse rights or covenants which might impede or prevent the continued use of the Property as a commercial office building and car park, subject to the following:- 4.2 Adverse Matters A Conveyance dated 26 November 1953 reserved rights to build on the land to the north west, north east and south east of the land shown edged and numbered 2 in yellow on the title plan (which comprises part of the Property) so that the Property does not benefit from any easement or right of light or air which would diminish or interfere with the free and unrestricted use of the adjacent land referred to above. This may have an impact on future redevelopment of the Property (if that is envisaged at any stage or on the investment value of the Property) as it may prevent development of the Property with additional buildings or buildings laid out differently to the current design. If TW has any concerns in this regard and would like specialist advice, please advise us The Conveyance dated 26 November 1953 also imposes a restrictive covenant on the part of the Property within the land shown edged and numbered 2 in yellow on the title plan not to block or permit to be bir_prop2\ \2 10

11 blocked the ditch forming the western boundary of the land and to keep clean and ensure the free flow of water therein. The Property does not appear to extend to the edge of the land shown edged and numbered 2 in yellow on the title plan so should only have to comply with the obligation not to block or permit the ditch to be blocked The part of the Property which falls within the land shown edged and numbered 2 in yellow on the title plan is also subject to all rights of way, water and other easements (if any) affecting the same which were reserved by the Conveyance dated 26 November It is a requirement of the Contract that SL provides a defective title indemnity policy in respect of these rights affecting the property. Please refer to the draft policy and comments at paragraph 4.5 of this Report A Conveyance dated 8 May 1972 imposes the following restrictive covenants on the land shown edged and numbered 4 in yellow on the title plan which appears to comprise part of the Property: To keep fenced and maintain good and sufficient fences along the south western and north western boundaries and sides of the land; and Nothing is to be done on the Property which shall be or may become a nuisance, annoyance, danger or inconvenience to the owners or occupiers of the adjoining or neighbouring property. TW will need to keep part of the boundaries of the Property fenced in accordance with the above obligation as TW is obliged to in any event under the Contract The Property is, to the extent that it is within 1.5m of the land shown hatched blue on the title plan, subject to the following covenants imposed by a Lease of the substation (shown coloured pink on the title plan) to The South Eastern Electricity Board (the Board ) dated 29 July 1986: Not to do or suffer or permit to be done any act which would in any way interfere with or damage any electric lines retained or laid by the Board in the exercise of the easements granted by the lease; Not to erect or suffer to be erected any building or structure (other than as shown on the plan and only then provided that the covenant to pay 2,553 as a contribution towards the cost of constructing the electrical bir_prop2\ \2 11

12 transformer has been paid to the Board which should have been paid on completion of the Lease) and not to plant or permit or suffer to be planted any trees on or within a distance of 1.5 meters of the land shown coloured yellow on the plan to the Lease (a copy of which is annexed as Appendix 11), the same area of land is also shown hatched blue on the title plan. SL has confirmed that the Property has not been constructed within 1.5 metres of the yellow land and TW has confirmed the same The Property is subject to the following restrictive covenants imposed by a Transfer dated 23 December 1986: Not at any time to construct any buildings or other erections on the Property apart from boundary fences within 15 feet of the northern boundary marked A-B on the plan to the Transfer (a copy of which is annexed as Appendix 12); To keep in repair the facilities on the Property for the disposal of surface water from the roadway shown coloured brown and green and the footpath shown coloured purple on the plan to the Transfer (ie Challenge Court road) and to contribute 7/9 of the cost of the adjacent owner maintaining and repairing the facilities for the disposal of surface water on the part of the adjacent land to the north which adjoins Challenge Court road. TW should only be responsible for a reasonable proportion of any such sums as this obligation was imposed on the whole of the Challenge Court estate. Please note that the Drainage and Water search result (see our comments at paragraph 5.3 of this Report) advises that the surface water from the Property drains into a public sewer although these drains are along Hazelmere Close rather than in the land to the north of Challenge Court; Not in any way to obstruct by the parking of vehicles or otherwise the roadway and footpath (referred to in paragraph ) nor construct a gate or other barrier across the same; and Not at any time to obstruct or in any way interfere with the conducting media (drains, sewers, wires, cables, pipes and other conduits in, through or over the roadway and footpath (referred to in paragraph ) nor make any bir_prop2\ \2 12

13 connection thereto without the prior written consent of the owner of the land registered under Title Number SY (such consent not to be unreasonably withheld). 4.3 Matters Benefiting There are none which benefit the Property. 4.4 Boundaries The title documents are silent as to ownership/maintenance obligations in relation to boundary enclosures aside from the covenant to maintain the south western and north western boundary fence referred to in paragraph of this Report. 4.5 Defective Title Insurance A copy of the draft policy provided by SL is annexed as Appendix 13. We have asked SL to make certain amendments to the draft policy to correct inaccuracies in the rights and documents on title referred to in the policy. SL has obtained a draft policy on the basis of a limit of indemnity of 1,235,000 for a premium of The premium will be paid by SL. Please note the terms of the proposed insurance policy and in particular the costs etc. against which TW will be indemnified. The total amount payable by the insurers under the policy can never exceed 1,235,000 regardless of the number of claims made against TW. TW must comply with the conditions of the policy including the obligation to inform the insurers without delay and in any event within 30 days after TW becomes aware of any potential or actual claim and to pass onto the insurers any documents received which may give rise to a claim. TW must take reasonable steps to safeguard its interest. TW must not attempt to settle a claim without the insurers written consent. TW must not disclose the existence of the policy to any third party other than bona fide purchasers and their mortgagees. 5. SEARCHES Copies of our searches are attached as the Appendix numbers indicated below. We comment on the search results as follows: 5.1 Local Authority Search (Appendix 14) Please note: bir_prop2\ \2 13

14 5.1.1 The search result reveals a number of planning permissions (with references: MODO.026, MO/88/0518, MO/85/0926A, MO/85/0926 and MO/89/0728) relating to the construction of buildings for Class B1 (offices) of the Town and Country Planning Use Classes Order A copy of each policy is attached also at Appendix 14; the search result advises that the following development plans which have been adopted: The Surrey Minerals Plan 2011 Core Strategy Development Plan adopted 19 July 2011; The Surrey Waste Local Plan adopted 6 May Please advise if you would like us to obtain further information in relation to these documents the Mole Valley Local Plan was adopted in October 2000 (saved policies), the Mole Valley Core Strategy document was adopted on 1 October 2009 and the Dorking Town Area Action Plan was adopted on 5 December Please advise if you would like us to obtain further information in relation to these documents There is a policy (Policy CS1) for new development in previously developed land within the built up areas of Leatherhead (and other towns). There are also provisions for limited development and infilling on previously developed land (PC133) within larger rural areas, consideration of development in the countryside and review of the existing Green Belt boundary through the Land Allocations Development Plan Document. There are further provisions with regards to housing provision for at least 3,760 net dwellings within the district between 2006 and 2026 (Policy CS2) with priority to be given within the defined built up areas of Leatherhead (and other towns) Challenge Court is not highway maintainable at the public expense but Barnett Wood Lane is a highway maintainable at the public expense. For further information see the result of our Highways Search in paragraph 5.3, below; One Tree Preservation Order (reference TPO/117/2/G) affects the Property. A copy is attached at Appendix 15; there are no entries in the Contaminated Land Register in relation to the Property. This does not mean that the Property is free from contamination; bir_prop2\ \2 14

15 5.1.8 the Property is not in a Radon Affected Area; and there is a gas pipeline within 100 feet of the Property. Please refer to our further comments in this regard at paragraph 5.6 of this Report; There are no entries affecting this Property in either the Register of Common Land or the Register of Town or Village Greens. 5.2 Highways Search (Appendix 16) This advises that the nearest adopted highway is Barnett Wood Lane and the extent of the adopted highway is shown coloured yellow on the search result plan. The result advises that Challenge Court is a private road. TW should check this plan carefully against the Contract plan to ensure that there are no gaps or ransoms between the estate road over which TW is granted rights of way and the adopted highway. 5.3 Drainage and Water Search (Appendix 17) The result advises that foul and surface water from the Property drains to a public sewer and that a charge for surface water drainage is payable. It also advises that the Property is connected to mains water supply. The Property is served by a water meter. Please refer to the plans attached to the search result which indicate the location of the foul and surface water pipes and the existing mains. 5.4 Chancel Repair Search (Appendix 18) This advises that the Property is within the boundary of a district which continues to have a potential chancel repair liability. This does not mean that an actual liability exists and the title to Thornets House does not reveal the existence of any covenants giving rise to such liability. We have obtained a quote for chancel repair liability indemnity insurance and attach a copy of the draft policy and the letter we have sent you in respect of this policy also at Appendix Utilities Searches (Appendix 19) Southern Gas Networks this advises that there is a low/medium/intermediate pressure gas main near to the Property. Please refer to the mains plan attached to the search result which shows the location. This will need be taken into account and accommodated when any works at the Property are carried out. bir_prop2\ \2 15

16 5.5.2 Instalcom Ltd this advises that Level 3. Global Crossing (UK) Ltd, Global Crossing PEC Fibernet UK Ltd and Fibrespan Ltd networks do not have any apparatus within the immediate proximity of the Property National Grid this advises that there is no National Grid Transmission infrastructure in the vicinity of the Property and therefore there are no easements or wayleaves affecting the Property for National Grid Transmission Gas and Electricity apparatus Virgin Media this advises that Virgin Media and Viatel plant should not be affected by TW s purchase of the Property. Please refer to the plan attached to the result which shows Virgin equipment in the vicinity of the Property. 6. ENVIRONMENTAL ISSUES The original GroundSure Report is annexed as Appendix 20 and recommendeds that further environmental risk assessments are carried out as there is potential that the Property could be affected by ground contamination as a result of historical land uses on site and in the immediate vicinity and the potential for significant source-pathway-receptor relationships to exist at the Property. However, since TW obtained an from Rob Ivens (Scientific Officer, Mole Valley District Council) dated 25 June 2013, a revised GroundSure Report has been issued (copy also attached as Appendix 20) which advises that the Property has low-moderate environmental risk, that it is unlikely that statutory action will be taken against the Property and that it is unlikely that the value of the Property will be impacted due to environmental liability issues. Formatted: Font: Bold The report acknowledges the content of the from Rob Ivens which stated that the council has not prioritised the Property for inspection and that they do not intend to do any further work on the Property. The confirms that the council are aware that the Property was formally a factory or works but feel that the current use is not considered sensitive in nature and that if the Property were developed it would be subject to normal planning controls. The report concludes that there is unlikely to be significant environmental liability given the continuation of the Property s current use and assuming acceptable ongoing levels of environmental management. However, it advises that if a change of use is proposed in future, land quality investigation and risk assessment should be undertaken. The result indicates that the Property falls within an area where there is a negligible risk of flooding and that if the Property were redeveloped, a PPS25 compliant Flood Risk Assessment is unlikely to be required. bir_prop2\ \2 16

17 The result advises that there is a moderate potential for natural ground instability at the Property and you may wish to seek further advice from a surveyor or engineer. SL have resisted providing any information about contamination other than a ground report they did at the time of acquisition provided for information purposes only via the agents and TW cannot rely on it. We have attempted to negotiate an indemnity from SL for past contamination into the Contract but SL s standard position is to resist providing indemnities and will not on this occasion either provide an indemnity to TW. TW will therefore be liable for future contamination at the Property and potentially for past contamination where the polluter cannot be found by the Environmental Agency. TW has confirmed that it has satisfied itself with regards to the risk of contamination at the Property is happy to proceed. 7. ENQUIRIES BEFORE CONTRACT A copy of the enquiries raised and replies is annexed as Appendix SITE INSPECTION TW has confirmed that it does not require us to undertake a site inspection. 9. STAMP DUTY LAND TAX 9.1 TW s purchase of the Property and the grant to TW of the Reversionary Lease of the Existing Premises are linked transactions due to the fact that TW taking the Reversionary Lease only occurs as a result of TW buying the Property. However, it does not increase the Stamp Duty Land Tax ( SDLT ) payable as the rental consideration and the non-rent consideration are treated separately. 9.2 SDLT is due on the premium inclusive of VAT payable for the Property ( 1.2m plus 240,000 VAT so a total of 1,440,000) at a rate of 4% as it exceeds the commercial property threshold of 500,000. The SDLT payable is 58, The rental consideration due under the Reversionary Lease falls just below the nil rate threshold so no SDLT will arise on this element. 10. RISK ASSESSMENT Other than the usual commercial risks inherent in a deal of this kind, there are the following additional risks: 10.1 The environmental report originally advised that further investigation was recommended due to some unknown past and possibly contaminative uses. However, a revised environmental report has now been issued in light of the TW obtained from Rob Ivens, Scientific Office, Mole Valley District Council bir_prop2\ \2 17

18 dated 25 June 2013, which confirms that the Property is not prioritised for investigation and there is no intention to do any further inspection work on the Property. The also confirms that the council is aware the Property s former use as a factory or works but does not consider the current use to be sensitive in nature and that if the Property were redeveloped it would be subject to normal planning controls. As a result the report advises that the Property is unlikely to be subject to significant environmental liability on the basis of the existing use and assuming ongoing environmental management of the Property. SL will not agree to providing an indemnity for past contamination so TW may be liable for past contamination which comes to light in future if the Environmental Agency cannot find the original polluter. TW has confirmed it has satisfied itself with regards to the risk of contamination Completion of the purchase of the Property must take place on 1 July 2013 whether or not SL has removed reference to and has closed the two leasehold titles relating to now expired leases of the Property. If these applications have not been completed prior to the Completion Date, requisitions raised by the Land Registry will still have to be dealt with and we may need SL s co-operation with these. However, SL is not under any contractual obligation to assist TW should seek to agree the photographic schedule of condition in respect of the Existing Premises as early as possible to avoid any problems with the condition which TW has returned the Existing Premises to SL in once the lease (either the Existing Lease or the Reversionary Lease as applicable) has expired. Provided the photographic schedule of condition is agreed when TW vacates the Existing Premises and the Existing Premises are in a condition not materially worse than that evidenced by the photographic schedule of condition, TW will have no further liability to SL Under the Transfer of the Property, TW is under an obligation in perpetuity to maintain the 16 parking spaces over which rights are granted to SL and its successors in title and, as TW has agreed, TW will not receive any contribution to this cost or the cost of maintaining the roads and footpaths over which the vehicles using the parking spaces will drive to access those parking spaces... Nicola Woods Associate Eversheds LLP 115 Colmore Row Birmingham bir_prop2\ \2 18

19 B3 3AL (Ref: woodsni/ ) Date: 5 June Julia Flattery Senior Associate Eversheds LLP 115 Colmore Row Birmingham B3 3AL Date: 5 June 2013 bir_prop2\ \2 19

20 APPENDICES 1. Contract/Transfer Plan 2. Underlease of Existing Premises dated 14 March 2000 and Deed of Variation dated 18 February Headleases dated 25 April Contract 5. Transfer (TR1) surrender dated 17 May 2013 of 1989 Thornets House Lease 6. Insurance policy 7. Deed of Variation 8. Reversionary Lease 9. Transfer 10. Title Number SY and Title Plan 11. Lease dated 29 July Transfer dated 23 December Defective title draft insurance policy 14. Local Search Result 15. Tree Preservation Order 16. Highways Search Result 17. Drainage and Water Search Result 18. Chancel Repair Search Result, draft insurance policy and Eversheds letter 19. Utilities Searches Results 20. Environmental Search Result 21. Replies to CPSE Enquiries and other enquiries bir_prop2\ \2 20