An option agreement is a contract between the owner of a property and a potential buyer, giving the potential buyer the right to serve notice upon the owner to sell the property to them either at an agreed price or at its market value. It is an option because the potential buyer has a choice whether to exercise the option and buy the land. This type of contract is often used where land is owned by different parties and a developer may want to ensure sales of all units or none.
In general, the potential buyer will:
- pay the owner a small premium to secure an option for a fixed period of time;
- register the option at the Land Registry against the owner’s title; and
- carry out due diligence on the viability of the acquisition (considering issues such as planning permission, title and funding).
The potential buyer must decide whether to exercise the option before the end of the fixed period. If the option is exercised during the fixed time period, the owner is obliged to sell the property to the potential buyer.
Whether you are an owner or a potential buyer our Commercial Property team will work with you to ensure the option represents exactly what you require.
Please contact us today for a free no obligation telephone discussion by calling either our London, Marlow or High Wycombe offices or by email: firstname.lastname@example.org