Option Agreements

 

Attwells Solicitors have significant experience in advising both landowners and developers on disposals and acquisitions of land for development.

One of the most common structures of these transactions is for the parties to enter into an option agreement.

An Option usually gives the buyer a right to purchase the land if they give notice to the landowner during an agreed period (the option period), usually in return for a sum of money (the option fee). If the notice is given by the buyer during the option period, the landowner has to sell the land to the buyer on the terms of the option.

By entering into an option agreement, this allows the buyer to explore the planning potential of the site without being obligated to complete on the purchase should they not be able to obtain the permission they require. It is also a helpful way to structure a transaction where the land over which the buyer is looking to obtain planning is owned by several different parties.

Usually the option is exercised on the basis that planning permission has been granted, which will significantly increase the value of the land compared to the value without the benefit of planning permission without the landowner having to incur the costs of obtaining the planning permission themselves.  The price for the option may be fixed, based on a formula or subject to market value determination by a surveyor.

Although an option agreement is one of the most common methods of structuring a land acquisition or disposal, other structures may better suit some transactions. Attwells Solicitors are also able to offer expert advice on the following:

  • Conditional Contracts - where the developer and landowner agree to buy and sell the land conditional upon planning.
  • Promotion Agreements – where the promoter agrees to obtain planning and then promote the land for sale to a developer in return for a profit split on the sale proceeds.
  • Pre-emption Agreements – a right of first refusal should a landowner decide to sell.
  • Joint Ventures – between developers and landowners whereby the landowner puts the land into the venture and the developer the planning and building expertise and often the property is developed and then sold subject to a profit splitting arrangement.

Attwells are able to offer expert advice on all the possible methods of structuring a land acquisition or disposal based on your requirements, whether this is via an Option Conditional Contract, Promotion Agreement or an alternative structure.

If you are considering making a disposal or acquisition of land and would like to discuss your options, please contact Nick Attwell on 01473 229242 or 0207 722 9898 or email him at nick.attwell@attwells.com for an initial no-obligation chat.