What sort of issues should the lockout agreement cover? In fact lockout agreements can actually be created verbally – although this obviously adds to the difficulty in terms of improving the exact terms that have been agreed! Accordingly a lockout agreement can be created in the same way as any other contract.

It is an agreement not to negotiate with third parties for a limited period. A lockout agreement is not an agreement to sell land. The legal formalities under section 2 of the Law of Property (Miscellaneous Provisions) Act 1992 that the industry is used to in relation to contracts for the sale of land do not apply. How can you create a legally enforceable lockout agreement?Įven better from a buyer's point of view a lockout agreement does not actually have to be in writing signed by the parties. However, in 1992 in the case of Walford v Miles the House of Lords held that it was possible for lockout agreements to be enforceable – although the agreement in that particular case was not because it was open ended and not for a specific period. There used to be some doubt as to whether a lockout agreement would, in any event, be enforceable because in many ways such an agreement is no more than simply an agreement to agree. However, the recent case of Dandara v Co-Operative Retail Services may assist buyers in future who find that sellers have breached a lockout or exclusivity agreement. Historically, the answer has been not a great deal.

However, from a buyer's point of view the crucial issue is to what extent these agreements provide real protection in practice. the seller will not talk to any other potential buyers in the meantime) and allowing the buyer to start its normal due diligence. The rationale behind such agreements is that they enable a seller and buyer a short period to agree the specific heads of terms on a transaction whilst at the same time guaranteeing the buyer exclusivity during that period (i.e. However, from a buyer's point of view, the crucial issue is to what extent these agreements provide real protection in practice. Lockout agreements have become increasingly common in the property industry over the past few years.

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