Financial contributions imposed as a condition of planning permission are generally required to be paid prior to the commencement of construction work. However, agreements can be reached between the developer and the planning authorities for phased payment of the financial contributions but they generally include a considerable upfront payment. In the past, such agreements had the effect of enabling the developer to sell properties without having to discharge the full amount of financial contributions. Serious problems have now arisen for local authorities where developers have become insolvent leaving the issue of unpaid financial contributions outstanding.
Failure to pay a financial contribution means that the planning permission has not been complied with. Failure to comply with a condition in planning permission affords a local authority grounds to serve an enforcement notice which in some cases could lead to the demolition of a property. However, there is no express legal provision which would entitle a local authority to recover unpaid financial contributions from the developer’s successor in title. Planning legislation is unclear as to where the ultimate liability lies: is it on the property or on the developer to whom the planning permission was granted?
WCC is of the opinion that unpaid planning contributions are a charge on the property itself and not on the developer and has issued letters of demand to a number of the homeowners of the Meadow Brook estate for a portion of the unpaid financial contribution. The total amount claimed by WCC is just over €65,000.00 in total.
The issue of unpaid financial contributions is a matter for each local authority. Financial contributions are a source of significant funding for local authorities and given that there are reportedly €300 million in unpaid financial contributions in respect of planning permissions nationwide it is likely that WCC will not be the only local authority adopting this approach in such circumstances.
Dublin City Council has however recently stated that its policy is not to pursue householders. Both Dun Laoghaire Rathdown and Fingal County Council are reported to have stated that they were unable to be definitive about their approaches to the issue. However whether or not local authorities adopt a policy of pursuing home and property owners the problem is likely to rear its head on a sale or remortgage when a purchaser or his solicitor will immediately seek clarity from the local authority concerned.
Given the history of insolvent developers in the Sandyford and surrounding areas local home and property owners may not be immune to this problem.
The precise legal basis for the actions of WCC in issuing these letters of demand to the homeowners of the Meadow Brook estate is unclear and may soon become the subject of a test case. The matter may well have broader implications for all property owners both residential and commercial in circumstances where financial contributions remain unpaid.
The outcome of this move by WCC will be awaited with great interest by property owners, investors, lawyers, banks and insolvency practitioners.
For further information and advice in relation to “Homeowners Threatened With Legal Proceedings For Developer’s Failure To Pay Financial Contributions”, please contact Deirdre Farrell, partner, Amorys Solicitors email@example.com, telephone 01 213 5940 or your usual contact at Amorys.