8 May 2019

What are Option Agreements and How Can They Benefit You?

What are option agreements and how can they benefit you? Our Commercial Property Team explains.

what is an option agreement?

An option agreement is a contract between the landowner and a potential purchaser of the land or property, which gives the purchaser the option to buy at a later date.

what are the benefits of an option agreement?

There are a number of benefits to option agreements for both parties, these can include:

buyers.

You can secure the final purchase price. If we can negotiate such a term the buyer only pays the contracted price even if the value increases.
It gives you time. You may need time to raise finance or seek planning permission.
It prevents the landowner from selling the land/property within the option period.
Option agreements can be registered with the land registry

sellers.

You can secure the final purchase price. So, if the value of your property drops during the period the agreement is in place, this will not matter if you have agreed a higher price.
You can continue to use the land as freely as possible whilst planning is sought and obtained.
The costs of obtaining planning permission / seeking out architect and surveyors fall to the potential buyer.
Importantly, Sellers are frequently compensated with a payment from the buyer in exchange for a call option agreement.

With all option agreements, we would strongly recommend that you work with a trusted commercial property solicitor. Option agreements need to be very carefully negotiated and structured and good advice and the drafting experience of a seasoned commercial property lawyer is a ‘must’.

our lawyers deliver an excellent quality service, independently recognised by The Law Society and our many returning clients.

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