Step-by-Step Guide to Drafting a Section 106 Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Section 106 Agreements are a vital tool in managing development projects. They allow developers to make contributions to the local area, such as funding for affordable housing, infrastructure and public open space, while mitigating any potential negative impacts of the development. Navigating the process of agreeing a Section 106 Agreement can be complex- it must be tailored to fit the specific needs of the project and take into account all stakeholders including local authorities, developers, residents and other relevant third parties.

To ensure that the commitments made by developers are met and that the Agreement is kept up-to-date, it is important for all parties involved to have a full understanding of their roles and responsibilities. With this in mind, The Genie AI team has created an easy step-by-step guide which takes you through every aspect of drafting your Section 106 Agreement. Our guide is designed for both experienced lawyers and those with no legal background who want to understand more about these agreements.

Our step-by-step process will provide you with all of the information you need to draft your agreement accurately and effectively; from outlining each section’s purpose in plain English, defining terms and conditions or offering advice on how best to negotiate disputes between stakeholders. Plus if you need help along your journey we have a thriving community template library which offers access to millions of high quality legal documents – accessible without needing an account!

At Genie AI we understand how important these agreements are not only when managing development projects but also in ensuring fairness across both public and private sectors - so our mission is simply to arm you with all the knowledge necessary for successful completion. Read on below for our step-by-step guidance on Section 106 Agreements – plus find out how to access our template library today!

Definitions (feel free to skip)

Local Authority - A local government body responsible for providing services to people in a given area.
National Planning Policy Framework - A set of government regulations that establish how land and property can be used in a given area.
Stakeholders - People or organizations that have an interest in the outcome of a particular project or situation.
Negotiations - Discussions between two or more parties in order to reach an agreement.
Statutory Bodies - Organizations with the legal authority to enforce laws and regulations.
Timeline - A plan that outlines the tasks, events, and deadlines associated with a project.
Relevant - Pertaining to a particular purpose or situation.
Obligations - A duty or responsibility that is legally required.
Compliance - The act of following rules and regulations.

Contents

• What is a Section 106 Agreement?
• When is a Section 106 Agreement Necessary?
• Preparing for Negotiations
• Identify relevant stakeholders
• Establish clear objectives
• Research and Gather Documentation
• Understanding the Legal Framework of a Section 106 Agreement
• Review Local Planning Policy
• Familiarize yourself with the National Planning Policy Framework
• Drafting the Agreement
• Draft the agreement in accordance with legal requirements
• Submit the draft to relevant stakeholders for review
• Defining Requirements and Obligations
• Establish the scope of the requirements and obligations
• Negotiate the final terms and conditions of the agreement
• Negotiating Final Terms
• Engage in a discussion to identify the best outcome for all stakeholders
• Record the agreed terms and conditions of the agreement
• Completion and Execution of the Agreement
• Sign and date the agreement
• Notify relevant parties of the completion of the agreement
• Ongoing Monitoring and Compliance
• Monitor the performance of the parties to ensure compliance
• Take corrective action where necessary
• Conclusion
• Summarize the key points of the agreement
• Review the agreement and its implications

Get started

What is a Section 106 Agreement?

• Understand what a Section 106 Agreement is and why it is important
• Learn what a Section 106 Agreement entails and its components
• Research the legal requirements of a Section 106 Agreement and determine if it is necessary for your project
• Familiarize yourself with different scenarios in which a Section 106 Agreement may be required

When is a Section 106 Agreement Necessary?

• Understand when a Section 106 Agreement is necessary for a project
• Be aware of the purpose of a Section 106 Agreement and the process of creating one
• Consult with the appropriate State Historic Preservation Office to determine if a Section 106 Agreement is necessary
• Know when a Section 106 Agreement is usually required for a project
• Gather any relevant information for the project

Once you understand when a Section 106 Agreement is necessary for a project and have gathered any relevant information, you can check this off your list and move on to the next step: Preparing for Negotiations.

Preparing for Negotiations

• Research and review the applicable laws and regulations that will govern the agreement
• Identify the relevant stakeholders who must be involved in the negotiation process
• Gather the necessary documents and information that will be used in negotiations
• Develop an outline for the agreement

Once you have completed the research and identified the relevant stakeholders, documents, and information, you will have a better understanding of the negotiation process and what to expect. You can then check this off your list and move on to the next step.

Identify relevant stakeholders

• Identify all stakeholders who will be affected by the Section 106 Agreement.
• These stakeholders may include local, state, and federal agencies, local and tribal governments, private landowners, and members of the public.
• Reach out to all relevant stakeholders to gauge their interest in the agreement and to solicit their input.
• When all stakeholders have been identified and contacted, this step can be checked off the list.

Establish clear objectives

• Establish a clear and specific objective and timeline for the Section 106 agreement
• Identify the desired outcome of the agreement and any associated risks
• Break down the agreement into smaller, manageable goals
• Determine any potential conflicts between stakeholders
• Assess the impacts of any proposed actions
• When all objectives have been established and agreed upon, move on to the next step.

Research and Gather Documentation

• Identify any applicable regulations, local ordinances, and state/federal statutes that will affect the Section 106 Agreement
• Research the history of the project and the surrounding area to understand the context of the agreement
• Gather documentation related to the project, such as plans, drawings, and maps
• Research any potential stakeholders or parties with interests in the project
• Collect any existing reports related to the project
• Collect any existing reports related to any potential adverse effects of the project

When you have collected all the applicable documents, you can move on to the next step of understanding the legal framework of a Section 106 Agreement.

Understanding the Legal Framework of a Section 106 Agreement

• Research the relevant legislation and regulations that affect the development and apply them to the specific context of the proposed project
• Become familiar with the various legal requirements and duties of the parties involved in the agreement
• Identify any additional legal frameworks that may affect the agreement, such as environmental protection laws, zoning regulations, etc.
• Understand the difference between binding and non-binding obligations, and the implications of each
• When you can identify the relevant legal framework, understand the different legal requirements and duties of the parties, and identify any additional legal frameworks that may affect the agreement, you can move on to the next step.

Review Local Planning Policy

• Review the local planning policy for the area in question to ensure that the proposed development does not contravene existing laws
• Investigate the plans and policies relevant to the development and consider any necessary changes to the proposal
• Identify any potential impacts of the development on the local environment, and ensure that they are addressed in the agreement
• Consider any relevant consultation that needs to be undertaken with local stakeholders and incorporate the results into the agreement
• Make any necessary changes to the proposal based on the results of the local planning policy review

When you can check this off your list: When you have addressed any potential impacts of the development on the local environment, undertaken any relevant consultation with local stakeholders, and incorporated the results into the agreement.

Familiarize yourself with the National Planning Policy Framework

• Read the National Planning Policy Framework and make sure you understand the principles and policies within it.
• Take notes on any key points that are relevant to the project.
• Familiarize yourself with the local planning policy and how it relates to the National Planning Policy Framework.
• Research any additional guidance that may be relevant to your project.
• When you feel you have a good understanding of the National Planning Policy Framework, you can move on to the next step in the process.

Drafting the Agreement

• Familiarize yourself with the legal requirements for a Section 106 Agreement
• Draft the agreement based on the requirements of the National Planning Policy Framework and other applicable legislation
• Ensure that the agreement includes all necessary provisions and is legally binding
• Incorporate any special conditions agreed upon with relevant parties
• Ensure that the agreement is clear and unambiguous
• Check that the agreement is in compliance with all applicable regulations
• When the agreement is complete, seek the approval of the relevant parties and make any necessary changes
• When all parties have agreed, sign and date the agreement
• When the agreement is finalized, have it registered with the local authorities
• Once the agreement is registered, it is legally binding and can be enforced.

Draft the agreement in accordance with legal requirements

• Consult with your legal counsel to ensure the agreement meets all applicable legal requirements
• Make sure the agreement contains all the necessary elements, including a clear definition of the historic property, a detailed description of the appropriate work, and an outline of the responsible parties’ roles & responsibilities
• Confirm that each party has a complete understanding of their obligations and the terms of the agreement
• Review the agreement to make sure it is clear, concise, and properly formatted
• Once you have verified the agreement meets all legal requirements, you can mark this step as complete and move on to the next step.

Submit the draft to relevant stakeholders for review

• Create a list of stakeholders who should review the agreement draft.
• Contact each stakeholder to request a review of the draft.
• Send the draft to each stakeholder and provide a timeline for when they should respond with their feedback.
• Collect and review feedback from each stakeholder.
• Make necessary updates to the agreement based on the feedback.
• Once all updates have been made to the agreement draft, you can move on to the next step of defining requirements and obligations.

Defining Requirements and Obligations

• Identify the parties and the project for which the agreement will be drafted
• Outline the requirements and obligations of each party, including any applicable laws and regulations
• Establish a timeline for when the parties must fulfill their requirements and obligations
• Specify any reporting or other protocols that must be followed
• When all requirements and obligations are defined, document them in a written agreement
• Know that once all requirements and obligations are outlined in the written agreement, the step is complete and the draft can be submitted to relevant stakeholders for review.

Establish the scope of the requirements and obligations

• Consult with stakeholders to determine the scope of the Section 106 Agreement
• Estimate the time and resources needed to comply with the requirements and obligations
• Identify any areas of conflict between the stakeholders
• Determine whether any additional studies or research needs to be conducted
• Make sure the scope of the Section 106 Agreement clearly outlines the obligations and responsibilities of all parties

When you can check this step off your list:

• When all stakeholders have agreed to the scope of the Section 106 Agreement
• When all requirements and obligations have been clearly identified and agreed upon

Negotiate the final terms and conditions of the agreement

• Identify any potential issues and discuss them with all parties to the agreement
• Discuss any remaining details that need to be agreed upon
• Draft an early version of the agreement that should include all of the agreed-upon terms and conditions
• Discuss the draft agreement with all parties to ensure that all concerns are addressed
• Revise the draft agreement and discuss it again with all parties
• Reach a consensus on the final agreement
• Finalize the agreement with all parties

You will know that you can move on to the next step when all parties have agreed to the terms of the agreement and all necessary revisions have been made.

Negotiating Final Terms

• Prepare a draft agreement that includes all elements required by Section 106
• Research and identify all stakeholders who will be affected by the agreement
• Contact stakeholders to discuss the agreement and negotiate final terms
• Incorporate feedback from stakeholders into the agreement
• Make any necessary edits to the agreement to ensure that all stakeholders’ interests are met
• When all stakeholders have agreed to the final terms, the step is complete and the agreement is ready to be signed.

Engage in a discussion to identify the best outcome for all stakeholders

• Brainstorm a list of potential solutions that offer the best outcome for all stakeholders
• Consider creative solutions that might not be immediately apparent
• Invite key stakeholders to the discussion to ensure their interests are represented
• Ask questions, gather input, and listen to all viewpoints
• Take notes on the discussion and potential solutions to ensure no details are lost
• When everyone agrees on a solution, ensure that all the details are documented
• Check off this step once a solution that meets all the stakeholders’ interests has been agreed upon.

Record the agreed terms and conditions of the agreement

• Create a written record of the agreement that includes all agreed upon terms and conditions.
• Document should include a timeline for completion of the agreement, financial obligations, and any other terms and conditions that have been discussed and agreed upon by all parties.
• Make sure all parties have reviewed and are in agreement with the document before moving forward.
• Once the document has been reviewed and signed off by all parties, the step of recording the agreed terms and conditions of the agreement is complete.

Completion and Execution of the Agreement

• Ensure that all parties have signed and agreed to the terms of the agreement
• Ensure that all signatures are witnessed
• Ensure that all parties have received a copy of the agreement
• Make sure that all parties have been provided with the contact information of their respective representatives
• Make sure that all parties have read and understood the agreement
• Check that all relevant documents and attachments have been attached to the agreement
• Make sure that all parties have been provided with a hard copy of the agreement
• Once all the above steps have been completed, the agreement is ready to be executed

Sign and date the agreement

• Have all parties involved sign the agreement
• Make sure that the signatures are witnessed and dated
• Obtain a copy of the signed agreement for each party
• Once all parties have signed, you can move on to notifying relevant parties of the completion of the agreement.

Notify relevant parties of the completion of the agreement

• Gather a list of relevant parties including consulting parties, federal and state preservation offices, and the Advisory Council on Historic Preservation
• Send out a notice of completion to all parties, with a copy of the completed agreement
• Notify all parties that the agreement has gone into effect and is now binding
• Keep records of all notifications sent
• When all parties have been notified, check off this step and move on to the next step of Ongoing Monitoring and Compliance.

Ongoing Monitoring and Compliance

• Establish a clear timeline and method for monitoring the progress of the agreement
• Set regular review periods and establish a reporting system to track and assess compliance
• Monitor performance of the agreement to ensure that all parties are meeting their commitments and performing their obligations
• Identify any potential issues or discrepancies and address them in a timely and appropriate manner
• If the agreement is breached, take appropriate action to enforce the agreement
• When all parties are in compliance with the agreement, you can move on to the next step.

Monitor the performance of the parties to ensure compliance

• Set up a process to regularly review performance metrics and progress reports to ensure that all parties are meeting their obligations.
• Track progress and ensure that deadlines are met.
• Establish a system of reporting and accountability.
• Ensure that the agreed-upon terms are being followed by all the parties involved.
• When the parties are in compliance, you can check this off your list and move on to the next step.

Take corrective action where necessary

• Identify any areas in which the parties are non-compliant with their obligations
• Work with the parties to develop corrective action plans to address any non-compliance
• Monitor the implementation of corrective action to ensure that the parties are meeting their obligations
• Where necessary, take additional steps to ensure that corrective action is taken
• Provide support and guidance to the parties to ensure that corrective action is successful
• When corrective action is achieved, move onto the next step of the process.

Conclusion

• Read the entire agreement and make sure that all parties have signed off on it
• Ensure that all areas of the agreement have been addressed and that there are no gaps
• Ensure that the agreement is legally binding and enforceable
• Make sure to include a clause that allows for the agreement to be amended or terminated under certain conditions
• Make sure all exhibits, attachments, or related documents are included
• Make sure all parties have copies of the agreement
• When the agreement is complete, check it off your list and proceed to the next step.

Summarize the key points of the agreement

• Read through the agreement and note the key points
• Make sure to highlight any conditions that are attached
• Create a summary that outlines the key points and any associated conditions
• Check your summary against the actual agreement to ensure that it is accurate and complete
• When your summary is complete and accurate, you can move on to the next step.

Review the agreement and its implications

• Carefully read through the entire Section 106 Agreement
• Take notes on any questions you have or any additional clarifications you need
• Identify any areas of the agreement that may need further negotiation or discussion
• Consider how the agreement will impact any other existing agreements or regulations
• Research any relevant laws, regulations, or other agreements that may be affected
• When you have a full understanding of the implications of the agreement and feel confident in your understanding of it, you can move on to the next step.

FAQ:

Q: What makes a Section 106 Agreement different from a regular contract?

Asked by Lawrence on January 22, 2022.
A: A Section 106 Agreement is a legally binding document between two parties. It is similar to an ordinary contract, but it includes additional clauses that are specific to the UK planning system. This means it must include certain provisions such as the preserving of listed buildings, or providing public access to land that is subject to the agreement. The purpose of a Section 106 Agreement is to ensure that any development proposal meets the conditions set out in the local authority’s Development Plan. Therefore, it is a more tailored and specific type of contract than a regular contract.

Q: Are there any particular aspects of Section 106 Agreements which are unique to England and Wales?

Asked by Bryan on April 5, 2022.
A: Yes, there are certain aspects of Section 106 Agreements which are unique to England and Wales. For example, in England and Wales, Section 106 Agreements must include a financial contribution towards infrastructure works. This is usually known as a ‘Section 106 Agreement’ or ‘Planning Obligation’ and is used to help fund infrastructure works such as roads, schools or community facilities which will be required as a result of the development. Additionally, the government has the power to impose an ‘affordable housing’ requirement on developers in certain areas, meaning they must provide some percentage of affordable housing units as part of their development proposal. These requirements are unique to England and Wales and do not exist in other countries.

Q: Are Section 106 Agreements applicable across different industries and sectors?

Asked by Mary on June 17, 2022.
A: Yes, Section 106 Agreements can be applicable across different industries and sectors, regardless of whether it is a SaaS company, technology firm or B2B business. However, the specifics of the agreement may vary depending on the industry or sector that you are in. For example, if you are developing a large housing estate then you may need to make provisions for public access or preserving listed buildings which would not be relevant for other types of development proposals. It is therefore important that you ensure your agreement is tailored to your particular needs and industry or sector.

Q: What happens if I don’t comply with my Section 106 Agreement?

Asked by Samuel on August 29, 2022.
A: If you fail to comply with your Section 106 Agreement then you may be subject to legal action from the local authority or other affected parties. Depending on the severity of the breach, this could result in fines being imposed or other enforcement action being taken against you. It is therefore important that you ensure you comply with all the conditions set out in your agreement in order to avoid any potential legal issues further down the line.

Q: Are there any differences between UK vs USA vs EU jurisdictions when it comes to Section 106 Agreements?

Asked by Margaret on November 10, 2022.
A: There are some key differences between UK vs USA vs EU jurisdictions when it comes to Section 106 Agreements. In the UK for example, Section 106 Agreements must include a financial contribution towards infrastructure works whilst in the US this is not required. In addition, there may be differences in terms of what constitutes an enforceable obligation under each jurisdiction’s law - for example what may be legally enforceable in one jurisdiction may not be enforceable in another jurisdiction due to different interpretations of the law surrounding these agreements. Therefore it is important that you research these differences before entering into any agreement so that you understand what your obligations are under each jurisdiction’s laws.

Example dispute

Lawsuit Referencing Section 106 Agreement:

• Plaintiffs may bring a lawsuit against a company, individual or business that has violated a Section 106 agreement.
• The Section 106 agreement must be in place, and the violation must be stated in the agreement.
• Plaintiffs must prove that they have been damaged as a result of the violation of the agreement.
• Plaintiffs must also demonstrate that the violation was intentional or negligent.
• The court may award damages based on the extent of the violation, the amount of harm caused, the extent of the harm, and other factors.
• In some cases, plaintiffs may be able to seek an injunction or a court order to prevent the defendant from continuing to violate the agreement.
• Plaintiffs may also be able to seek punitive damages, which are intended to punish the defendant for their violation of the agreement.
• The court may also require the defendant to pay the plaintiff’s legal fees and court costs if the plaintiff prevails.

Templates available (free to use)

Section 106 Agreement Planning Obligation

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