Option Agreements | Commercial Property | Myerson Solicitors (2024)

Option agreements over property or land can be positive for both the landowner and the developer, but careful drafting is required to avoid potential pitfalls.

Whether you are a landowner seeking to maximise the value of your land or a developer looking to explore the viability of a project before committing to buy the land, we can assist with all aspects of option agreements, as well as other contract options such as conditional contracts, overage agreements and pre-emption agreements.

Our commercial property teamhas extensive experience in helping draft option agreements for landowners and third parties (often developers). We provide bespoke, expert advice to all our property clients. Our expert commercial property solicitors will give you clear, concise and practical advice tailored to suit you.

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• Acting for neighbouring rural landowners in connection with the grant of long-term option agreements over parts of their land for an innovative gas storage scheme. The option agreements provided for calculation of the sale price by reference to the Retail Prices Index and included provisions for crop loss compensation.
• Acting for a developer in connection with an option to purchase two separate parts of the seller’s title at different prices. The option agreement provided for extensions to the option period to tie in with the timeframes for the developer’s planning application and any appeal or call-in.
• Acting for both landowners and developers in connection with the variation of existing option agreements, for example to extend the option period to allow for planning consent to be determined.
• Our specialist property litigation solicitors are experienced in advising developers in connection with the exercise and service of option notices to ensure that the notice is valid.

An option agreement is a legal contract between a landowner and a third party (often, but not always, a developer). An option agreement gives the developer an option to buy a property on pre-agreed terms, by serving notice on the landowner during the option period.

The option may be exercisable at any time during the option period or only when a certain event occurs, such as the developer obtaining the required planning permission.

The length of the option period is a matter of negotiation between the parties. The purchase price for the property can be agreed between the parties at the outset with a fixed price given in the option agreement.

Alternatively, the agreement may contain a mechanism for calculating the purchase price at the point when the option is exercised, usually based on market value at that time.

An option agreement is a binding agreement entered into between the parties, however, the decision whether to exercise the option or not is at the developer’s discretion. Careful thought needs to be given, and professional advice sought, to several different aspects of the option agreement.