Property Option Agreements
An option agreement is a tool which enables a Buyer, usually of land or property, to buy an “opportunity” to buy the land itself later.
A Buyer of land may seek an option when he wants to tie the Seller to his proposed deal, but cannot take the risk to buy immediately in case his plans do not materialise.
Such options are normally used where a Buyer wishes to secure a site but also wishes to ensure that planning permission is first given for a development.
Alternatively, perhaps the Buyer has specific enquiries to raise of the Seller that may take time to answer or perhaps he needs sufficient time for finance to be obtained.
When considering the details to be included within an option agreement, there are several important matters to take into account:
- The price of the option – the cost of acquiring the opportunity to buy the land;
- The option period – the time until the last date by which the option must be exercised or will lapse;
- The exercise price – the cost of the land if the option is exercised;
- Expenses (such as professional fees) of achieving the target reason for seeking the option;
- The statistical chance of achieving the target reason (such as obtaining planning permission).
It is important to ensure that an option agreement is as detailed and thorough as possible. Often option agreements are used in proposed developments of significant value and, if there is any issue over how the option is to be implemented or the price is to be paid, it can often cost the parties a lot of time and money which could be avoided with a properly drafted agreement.
At Oliver & Co Solicitors our specialist commercial property lawyers have over 30 years of experience in drafting option agreements and whether you are the owner of the land or the proposed purchaser, we will ensure that the agreement covers all those matters necessary to secure and protect your interests.
Contact us today on 01244 312306 for further assistance on property option agreements or other property related issues.
Call and speak to a member of our team on 01244 312306