Internal Agreements and Heads of Terms
Internal Agreements for Common Land
For Stewardship and ELM Agreements on common land an Internal Agreement between the parties is required by the RPA if there are two or more parties involved in delivering and or benefiting from the scheme then. Another name for an Internal Agreements is a ‘Side Agreement’.
An Internal Agreement is preferably signed as a Deed so it is binding on successors in title and partners and by law deeds are required to be drafted by a solicitor. Land agents and environmental advisors are not allowed to draft Deeds.
Some requirements on the content of the internal agreement is provided by government:
Under the Countryside Stewardship (CS) scheme it is mandatory for all commons comply with the RPA’s CS Common Land and Shared Grazing supplement to the CS handbook.
Under the Higher Level Stewardship (HLS) scheme it is mandatory for all commons to comply with the RPA’s Common Land and Shared Grazing supplement to the HLS handbook.
The Sustainable Farming Incentive (SFI) Moorland action will be a collective agreement for commons. Where there are more than two legal interests ie an owner and a commoner or two or more commoners an internal Agreement that ensures the SFI Moorland standard can be delivered and disputes resolved is a condition to be eligible for applying for an SFI agreement on a common. In addition reasonable efforts must be made to contact all with a legal interest. There is a £7/ ha/ year supplement for commons with 2 or more beneficiaries.
As the SFI Moorland is only a three year agreement we are working with a lawyer and Defra to provide a template or precedent Internal Agreement.
In addition to the mandatory requirements there are a number of other matters that the internal agreement should cover:
Voting arrangements; the default is one member one vote but it may be that there are classes of members e.g. graziers only vote on grazing issues
What happens when a tenant gives up or takes on common rights
What happens when an owner sells their common rights
How is money reclaimed from members in the event of a reclaim by the RPA
How are funds received managed and distributed
Who is responsible for distributing funds
How will be disputes resolved between parties and with the Rural Payments Agency
Preparing a Heads of Terms document
The download below sets out a draft ‘Heads of Terms’ document that you can use to instruct your solicitor to prepare an internal agreement. It can be tweaked to take into account your particular circumstances