Who has to sign a s106 agreement?

The question of who needs to sign a s106 agreement can be a bone of contention between applicants and local planning authorities. Opposing views can risk planning consents being held up, or third parties challenging consents for failure to properly secure essential mitigation. So who, then, should sign planning agreements?

The answer, I think, must be anyone who has an interest in the land and who the local planning authority would reasonably consider enforcing against.

I'm assuming here that the s106 is needed in connection with a planning application, to mitigate some otherwise unacceptable impacts of the proposed development. As such, it is important that the authority has done all that is reasonably necessary to secure the obligations – and that includes ensuring that the right people are on the hook. Let's also assume that the planning authority is not itself the landowner: that raises its own issues.

Section 106 itself does not say who 'must' sign a s106 agreement. It merely says that 'anyone with an interest in land' may do so.  On the face of it, there is no legal requirement to bind in all parties who have interests in the application site.

Take, by way of an example, a situation in which land is leased to a long-established institutional tenant on a 999 year lease, with no option to break, and where the obligations to be secured by the agreement are payment of a contribution in instalments on commencement, and then on the fifth anniversary therof. If the authority understands the terms of the lease, and is happy that the tenant is good for the contribution, there would seem to be little benefit in insisting that an unwilling landlord also signs up. If the tenant were to assign, or sublet, then the new occupier would be bound as someone deriving title from the covenanting tenant. However, if the lease did allow for breaks, then there would be a much clearer argument for the planning authority to want the landlord on the hook, to ensure that future tenants were also caught.

Similarly, if a freehold landowner is signing up to obligations which will bite only once an existing building has been demolished, there seems little to be gained by insisting that existing occupational tenants sign the s106. It is unlikely that any liability will arise while they have an interest in the site, so (subject to the precise drafting of the agreement), they'd be off the hook before they were really ever on it.

In most cases, the situation can be resolved through open communication between the parties, and some pragmatism on what is achievable in the circumstances. Some situations could be resolved through the use of alternative means such as conditions. Local authorities must bear in mind their statutory obligation to work with the applicant in a positive and proactive manner "based on seeking solutions to problems arising in relation to dealing with a planning application".

Please do get in touch if you are currently tackling this issue or have an interesting example of how you have resolved it.