Liz McDougall examines the legal and practical aspects of site and archaeological investigation licences – two documents which are becoming increasingly important in the development process.
There are encouraging signs that development work is under way again. As lawyers start to assemble the monolithic package of documents which are a characteristic of these transactions much of the legal paperwork will no doubt look familiar. Indications are, however, that there will be some new essentials on the precedents shopping list.
Site investigation licences
Increasingly, a vendor will be asked at the outset of a transaction to allow the prospective developer/purchaser full facilities to undertake a comprehensive site survey. Obviously, the value of this to the purchaser is to eliminate anxieties not only about the suitability of the site for development but also to identify (and quantify) any concerns about environmental liabilities. So the investigation must be undertaken as soon as possible, long before the parties stand in any contractual relationship, and in the full knowledge that there may never be a contract between them.
It is in both parties’ interest for this sort of investigation to take place without delay, but as the prospective (but by no means certain) purchaser may need to have access to the site for several weeks with the stated intention of carrying out physical operations on the land, some fairly careful thinking and drafting is necessary to ensure that the vendor is not left with an unsold development site full of holes and trenches.
The first precaution is obvious. Although the vendor may be only too willing to accede to the developer’s request to clinch the deal, it is important that the arrangements for the site survey are set out in a formal licence agreement. These documents need not run to more than a few pages and most property professionals will be familiar with the standard “boiler plate” provisions of a licence agreement. Individual circumstances will, of course, give rise to different needs, but a vendor contemplating the grant of a site investigation licence should consider the following points:
Purposes of the licence
Both parties must be absolutely clear about what exactly can be done on the site. The nature of any tests must be specified as must the type, extent and location of trial pits and boreholes. The developer should be responsible for fencing-off any boreholes and generally maintaining the site in a safe condition.
Statutory consents
It is unlikely that the operations will require planning permission (although consent might be required for hoardings or portakabins, for example); however, if the investigations involve any interference with, say, gas pipes or cables, the developer will need to obtain appropriate consents from the statutory undertakers.
Nuisance
Sinking boreholes or excavating land in any way creates a risk of contamination, particularly of underground waterways. Liability will rest with the person causing or permitting the contamination (eg the environmental consultant), but it will probably be the vendor who has to square up to the National Rivers Authority. An undertaking by the developer to avoid carrying out any activity which is likely to cause pollution is an obvious safeguard, but this should be coupled with an indemnity from the developer, which should be expressed to continue after the expiry of the licence itself.
Restoration
Making good the site after the investigations have been completed is another obvious ingredient. The developer should be under a specific obligation to backfill each borehole or other excavation and to restore the site to its former condition, including any landscaping features, roads and waterways on the site. The purchaser may not wish to restore the site immediately however, if its intention is to redevelop.
The danger for the landowner here is obvious. If the parties fail to come to an agreement, there is little incentive for the purchaser to restore the land. There must therefore be a significant degree of goodwill between the parties before the landowner even contemplates granting such a licence. The vendor might, in addition, consider taking a deposit or bond to secure the developer’s obligation to restore.
Risk
Most licence agreements provide that entry is at the licensee’s risk. The point is particularly relevant in the case of a site investigation licence. The developer should be required to take out third party liability insurance in a specified sum. The licence should contain a declaration that no warranty is given by the vendor saying that the site is fit for the stated purpose of the licence.
Supplying data
The site survey may, or may not, result in the development going ahead. Either way (but particularly if the deals goes off) the vendor will want to know the results of the various tests. The developer must be obliged to keep accurate records and plans of all excavation sites and boreholes, with their depths and inclinations and to allow the vendor to inspect these at any time. When the licence expires, the developer should be required to hand over a full set of the test data to the vendor.
Estate management
The vendor must remember the business needs of other occupiers of the site and impose obligations on the developer to carry out the investigations in a manner which is consistent with sound estate management principles.
Duration
Although it is in the nature of a licence agreement that the arrangements may be terminated by either side, at any time, licences are normally expressed to run for a stated length of time. The vendor will certainly wish to provide for a cut-off point in a site investigation licence, but negotiations for the purchase may well founder for reasons unconnected with the outcome of the survey. If so, the vendor must be able to terminate the licence arrangement immediately and, most important, invoke the obligations on the part of the developer to make good all disturbance to the site.
Archaeological investigation licences
Anyone dusting down their development precedents should make sure that they have an archaeological investigation licence in their repertoire.
Many of the celebrated projects of the 1980s resulted in the unearthing of significant historical discoveries, perhaps most famously the Rose Theatre at Southwark Bridge. Public emotion often runs high when there is an important find and, if the discovery is unexpected, the publicity can be enormous (and not always favourable). In these circumstances the developer will want to be in a position to negotiate very quickly with the relevant interest groups.
Fortunately, it more often happens that both the developer and local (and perhaps national) bodies have a fair idea that a site is likely to yield archaeological riches. In these cases, the developer can plan sensibly for a controlled excavation of the land.
Whether expected or not, the nature of the find may give rise to tensions between the interests of the developer and archaeologists or historians.
Archaeological discoveries fall into two distinct categories. Buried items such as foundations or fossil remains represent a positive opportunity to have access to a site which is being dug on a controlled basis and, as part of that process, to participate in the opportunities for discovery. Any disagreement centres on the length of time that the site is to be available for an archaeological investigation. On the other hand, if the remains consist of a physical feature, the development and construction processes run directly counter to the interests of conservationists, who will be campaigning to keep the area undisturbed.
Against this background, most developers will probably acknowledge the need for a licence which caters evenly for the competing needs of the parties. As always, specific circumstances will dictate the final form of the document, but the following points should be borne in mind:
Parties
The developer will seldom be free to deal with the excavation site alone. Those actually in occupation (for example, the building contractor) may need to be joined in, as may funders and possibly future tenants (depending on the terms of their agreements for lease).
Timing
Time will represent money to the developer and an ultimate long-stop date must be included as the date by which all excavation must cease and vacant possession handed back to the developer. It may also be worthwhile incorporating an undertaking, by the archaeologists, to give up occupation earlier if they are able to do so and (if this will help the developer) on a piecemeal basis.
Ownership of finds
Digging up and making off with artefacts found in the ground is not something which rests on the basic law of ownership. There is a complex set of principles involved and, as there will generally be layers of interests in the site (freeholder, leaseholder, funder, contractor and local authority, not to mention bodies such as English Heritage), this question must be thought through very carefully each time.
In any event, it may be appropriate to provide that the archaeologists arrange for the discoveries to be displayed to the public.
Payment
There may be commercial advantages in the developer assisting in the funding of the exploration. Quite simply, it may speed up the process. However, the developer will want to make sure that it is able to recover the outlay from its funders and it may wish to make an element of the payment conditional on the archaeologists leaving the site by the long-stop date.
Liability to contribute to the dig may also be expressed to be conditional on the development being allowed to go ahead and not being restricted (or prevented) by the outcome of the exploration.
Anyone digging into this area will need to be familiar with the Ancient Monuments and Archaeological Areas Act 1979 and DOE Planning and Policy Guidance Note PPG 16, as well as numerous local and private Acts of Parliament which affect individual regions.
Liz McDougall is a solicitor and legal development manager in the property department of City solicitor Herbert Smith.
