Glossary entry

Net Zero Overage & Net Zero Objectives

Disclaimer - please read

The definitions on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The definitions have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The definitions on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the definitions will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The definitions are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these definitions, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these definitions or any other person. Users should use their own professional judgement in the application of these definitions to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the definitions are based on the laws of England and Wales. We encourage the conversion of these precedent definitions for use in other jurisdictions.

Definitions

Net Zero Overage

Net Zero Overage means a clause included in a commercial property or land sale contract providing an additional payment to be paid by the buying party to the selling party after the sale has been completed if the buying party has failed to meet its Net Zero Objectives.

Net Zero Objectives

Net Zero Objectives means all of the following:

(i) maximise the proportion of housing in the Development that meets Level 6 of the Code for Sustainable Homes [or any successor or equivalent standard];

(ii) use construction materials with the lowest Embodied Carbon reasonably available;

(iii) maximise the-generation of renewable energy on the Development;

(iv) minimise the use of heating and hot water technologies that use Hydrocarbons or produce Greenhouse Gases;

(v) establish a programme to produce and sell renewable electricity generated by the development to residents or third parties;

(vi) maximise capture of carbon dioxide at the Development by mechanical or natural means;

(vii) use Carbon Offsetting for the Development as a last resort;

(viii) minimise the use of energy by the development using smart grid, demand side energy management and other technologies;

(ix) prioritise the use of electricity from Renewable Energy Sources over all other types of fuel on the Development;

(x) maximise the use of electric vehicles within the Development including by installing a substation with sufficient capacity to be able support the related charging requirements; and

(xi) connect into existing district heating schemes where possible.

Drafting notes

This definition is based on Rory’s Clause [Net Zero Land Promotion Agreement].

An Overage Clause is generally included in a commercial property or land sale contract and is used by the selling party for them to receive additional funds after the sale has been completed and an agreed ‘trigger event’ has taken place. In this case, the ‘trigger event’ is the buyer’s failure to meet the Net Zero Objectives after the completion of the sale.

The Net Zero Overage clause (Rory’s Clause) aims to discourage buyers of property from failing to meet the Net Zero Objectives set in the sale agreement and to allow landowners to influence the climate impact of a development.

Drafters should consider which of the items within the Net Zero Objectives should be included in their agreement.

Application

Real estate contracts in general, contracts between landowners and their promoters/developers, purchase and sale agreements, principles for landowners/ promoters/developers.

Used in Evelyn’s Clause [Securing net zero in development through planning].