Overage

Overage is a seller’s right to recover additional payment(s) from a buyer at some point in the future, usually after completion of a sale. Often this right is triggered by the occurrence of an event which increases the value of the land (eg the grant of planning or completion of development). ‘Overage’ and ‘clawback’ are interchangeable expressions. Overage may also be referred to as ‘deferred consideration’, ‘uplift’ or ‘kicker’.

Often overage provisions may act in both parties’ interests because a seller can share in future receipts or uplift in value and a buyer can defer payment until occurrence of the trigger event.

Overage agreements can be very complex to draft and, to some extent at least, must be bespoke to each transaction. Therefore they may not be appropriate where the prospect of the overage ever being triggered is remote. The imposition of overage may also