property purchase agreements

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Businesses should review land agreements to avoid infringing competition law.

By John D. Colahan and Anuj Ghai

Many UK businesses operate from, or handle property governed by, some form of land agreement. These land agreements can include agreements for the sale or lease of land and agreements dealing with the use of or access to land. Notably, as with other transaction agreements, land agreements must be compliant with competition law. Prior to 2011, restrictions contained in land agreements were exempt from the application of UK competition law due to the operation of the Land Agreements Exclusion Order; however, the Order was revoked in 2011 following the Competition Commission’s recommendations at the conclusion of the market investigation into the grocery retail sector. Consequently, UK competition law now applies to land agreements.

The UK Competition and Markets Authority (CMA) has not previously taken enforcement action or issued fines in relation to land agreements. However, the decision to impose a £1.6 million fine on Heathrow airport in 2018 indicates the CMA’s increased scrutiny of land agreement restrictions. The Heathrow case represents the first time that the CMA has used its competition enforcement powers to sanction a land agreement restriction. Moreover, on the same day that the CMA announced the Heathrow fine, it also published guidance entitled “Land agreements and competition: do’s and don’ts”. In addition, the CMA has recently sent letters to other airports and hotel operators warning against similar agreements.

Ruling finds that parties may make informal modifications without notarization after the conveyance has become binding.

By Christian Thiele

The German Federal Court recently ruled that parties may informally modify a property purchase agreement if the conveyance has become binding — thereby confirming prior case law. The Court further held that the parties may also make such informal modifications if they have granted fiduciary instructions to the notary not to file the conveyance with the land register until the purchaser has paid the full purchase price.

The case

On 4 May 2011, the defendant bought three apartments from the plaintiff by virtue of a notarial purchase agreement at a price of €309,692. The parties declared the conveyance and applied for the entry in the land register. In the purchase agreement, the parties instructed the notary to file the conveyance only when the purchaser paid the full purchase price. On 24 July 2012, the defendant demanded a €27,100.76 reduction of the purchase price. The plaintiff accepted the reduction in writing, and the defendant paid the reduced price. However, the plaintiff then requested the payment of the full purchase price, arguing that the reduction of the purchase price was invalid because the amendment had not been notarized.