Unilateral Undertaking or Section 106 Agreement: What You Need to Know
If you are involved in property development, you may have come across the terms “unilateral undertaking” or “section 106 agreement.” These are legal agreements between developers and local planning authorities that are intended to ensure that the development benefits both the community and the environment.
Both unilateral undertakings and section 106 agreements are commonly used in the UK, but what are they, and how do they differ from each other?
Unilateral Undertaking
A unilateral undertaking is a legal agreement between a developer and a local planning authority that is legally binding on the developer. The agreement sets out the terms and conditions that the developer must comply with before, during, and after the development.
The agreement usually includes clauses relating to the payment of financial contributions towards infrastructure and community facilities such as schools and parks, and the provision of affordable housing. The developer agrees to comply with these conditions in return for planning permission being granted.
A unilateral undertaking differs from a section 106 agreement in that it is a one-sided agreement, meaning that only the developer is bound by its terms. The local planning authority is not required to do anything in return.
Section 106 Agreement
A section 106 agreement is also a legal agreement between a developer and a local planning authority. Like a unilateral undertaking, it sets out the terms and conditions that the developer must comply with before, during, and after the development.
However, a section 106 agreement is a mutual agreement between the developer and the local planning authority. The agreement sets out what the developer will provide in return for planning permission being granted, and what the local planning authority will provide in return.
The terms of a section 106 agreement can be more complex than those of a unilateral undertaking, and the parties may negotiate the terms before the agreement is signed.
Which is Best for You?
Whether a unilateral undertaking or a section 106 agreement is best for you will depend on the specific circumstances of your development project. Unilateral undertakings are generally quicker and simpler to negotiate, as they do not involve mutual agreement with the local planning authority.
However, section 106 agreements may provide more certainty for both the developer and the local planning authority, as they are a mutual agreement. They can also be more flexible, as the parties are able to negotiate the terms, which can include more detailed provisions relating to the development.
Conclusion
Both unilateral undertakings and section 106 agreements are important legal agreements that can help to ensure that development projects benefit the community and the environment. The key difference between the two is that unilateral undertakings are one-sided agreements that are legally binding on the developer, while section 106 agreements are mutual agreements between the developer and the local planning authority.
Choosing the right type of agreement will depend on the specific requirements of your development project, and it is recommended that you seek the advice of a legal professional who is experienced in property development law.