Section 106 Agreement Mortgagee in Possession
A section 106 agreement mortgagee in possession refers to a legal arrangement in which a lender takes over control of a property that is subject to a Section 106 agreement. A Section 106 agreement is a legal agreement between a developer and a local authority, in which the developer agrees to provide certain benefits to the local community in exchange for planning permission.
When a property is subject to a Section 106 agreement, it means that the developer has agreed to certain restrictions on the use of the property and/or agreed to provide certain benefits to the community. For example, the developer may have agreed to build affordable housing on the site or provide funds for community facilities.
If the developer defaults on their obligations under the Section 106 agreement, the local authority can take enforcement action to force them to comply. However, if the developer goes bankrupt or is otherwise unable to comply, the local authority may need to turn to the lender to enforce the agreement.
In this case, the lender becomes the Section 106 agreement mortgagee in possession. This means that they take over control of the property and are responsible for ensuring that the Section 106 obligations are met. This can include paying for any outstanding obligations, such as the construction of affordable housing, out of the proceeds of the sale of the property.
As a professional, it is important to note that the use of Section 106 agreements can have implications for property owners and developers. If you are considering purchasing a property that is subject to a Section 106 agreement, it is important to understand the obligations and restrictions that come with it. Additionally, if you are a developer seeking planning permission, it is important to consider the potential impact of Section 106 agreements on your project, as they can significantly impact the feasibility and profitability of a development.
In conclusion, a Section 106 agreement mortgagee in possession is a legal arrangement that can arise when a developer defaults on their obligations under a Section 106 agreement. Lenders may become responsible for ensuring that these obligations are met, and this can have significant implications for property owners, developers, and local authorities. It is important to understand the potential impact of Section 106 agreements on any property or development project, and to seek appropriate legal advice if necessary.