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What are overage arrangements?

A person may sell land or a building but retain a right to receive one or more payments in relation to the property under an overage arrangement. Overage is an arrangement whereby the seller is entitled to receive from the purchaser one or more payments, in addition to the initial consideration, if one or more events occur in the future. For example, the buyer may be required to pay the seller an amount in addition to the initial consideration if planning permission is obtained, and a further amount if a development is completed. The right of the seller to receive the additional consideration is an overage right. Other terms that are sometimes used include ‘clawback’, ‘deferred consideration’, ‘slice of the action’ or ‘uplift’.