Property firm seeks £4.5m from developer in gazumping charge

Property firm seeks £4.5m from developer in gazumping charge


An Edinburgh-based property firm is locked in a legal battle with a developer after it was gazumped over the purchase of an Old Town site in Scotland. 

The Scotsman has reported that Beaghmor Property Ltd entered into an exclusive agreement with site owner Station Properties to buy the development earlier this year, bidding £7.5 million.


However, in July the property company found that Station Properties had accepted an £8.5 million bid from rival firm, AMCO Developments Ltd.


Beaghmor bosses swiftly launched a legal bid to block the sale of the site, as well as try to recover damages, which apparently amounted to the firm’s projected profits if the deal to turn the site into a hotel and offices had gone through.


Now lawyers for Station Properties have conceded that their client violated the exclusive “lock-out” agreement between the firms, but argued that it is currently facing financial difficulties and the sale should not be stopped.


The developer’s lawyers told judge, Lord Hodge, that Beaghmor could only be entitled to £25,000 in damages, or the amount that was spent during the failed negotiations.


Under the terms of the lock-out agreement, it was decided that the site would not actively be marketed, other offers would not be sought and Station Properties would have to inform Beaghmor if another company come forward with an offer.


However, due to Station Properties’ financial troubles, the blocking of the sale of the Old Town site would have a “disastrous effect” on the developer, according to its lawyers.


Lord Hodge has also hinted that selling the site would be preferable, so Station Properties would be able to pay any damages to Beaghmor, although he reiterated that the sale could not proceed yet.


The director of Beaghmor Property, 34 year old entrepreneur Chris Stewart, has said that negotiations with the developer have been “very frustrating”.


The next hearing is scheduled for early December.  

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