For the developer – Securing an option agreement minimizes your risk. If the issuance of the building permit takes longer than expected, you can be sure to have a legally binding agreement that prevents the seller from being frustrated and selling the land to another buyer (see here) in reference to an article that describes all the planning conditions that a member of the planning committee must take into account, it may elicit a little sympathy depending on the type of day you had). You can save the final purchase price of the property in the option contract. This can be a great advantage for agreements that take years and not months, because if the value of the land increases, you will only have to pay the contract price. An option can be registered to secure your potential investment. Louise Norris, partner in our commercial property team, explains what an option agreement is and why the parties to the purchase of land want an option. If the developer does not obtain the necessary building permit for the development of the land, it is unlikely that the developer will make use of the option and therefore the sale of the land will not continue. Option agreements allow developers to explore (and exclude) the possibility of acquiring land for potential development, without having to. Therefore, the option period and the option fee should be carefully reconsidered to reduce these risks. An option is a device that allows a buyer to buy an „opportunity“ to buy the land himself afterwards.
A buyer usually tries to buy an option if he wants to force the seller to sell, but before another event. Election agreements, carefully developed and agreed upon, can be a practical method that allows landowners to offer their land for development and reap the rewards without having to participate directly in planning or construction. The option agreement prevents the landowner from selling the property while the proponent reviews the viability of the project, thereby reducing the risk and potential costs to the developer. The land is only purchased when it is exercised by the buyer, which is based on a trigger event. As more and more landowners across the region market their land for development, option agreements are becoming increasingly popular for structuring agreements and attracting interest from potential developers. We are looking at some key options. Put a restrictive bund over the land. Use of a guarantee or loan. The imposition of a mortgage or property charge.
Acquisition of a seller/fair right to pledge on the property. Property rights at the beginning of the year (the property returns to the seller of the overrun if no payment is made).