The asset received by the option is referred to as the underlying. A land has a higher market value after a dwelling house has been built on it. Often, in addition to the option contract, an overspend agreement would be negotiated, so that if the land were to appreciate significantly after the land had evolved, the seller could, once completed, obtain an additional payment calculated on the added value. Under English law, sales contracts must be entered into in writing to be binding, as these are conditional contracts for the sale of land. Option agreements are a legal contract between a landowner and a potential buyer of the non-land, usually a real estate builder or developer. The option holder essentially has the option to acquire the land from the landowner at an agreed price within a specified time frame, once the terms of the option are met. The following article in this series deals with methodology and finer points, and a third compares options with pre-purchase and conditional contracts. Whether or not this is an option for registered land, the buyer should report it to the land registry. He or she needs a lawyer to do so, but he or she will need a plan unless the area covered by the option is the same as the seller`s registered title.

In this way, no other person can declare an interest in priority over the buyer`s interest. Clause 1 provides for the granting of the option for the “option period.” An “option fee” may be due. Unlike pre-purchase agreements that give the potential buyer only the right of pre-emption when the seller chooses to sell it, an option contract is a legally binding contract. So don`t be surprised that you (or the buyer, if you are the seller) are able to successfully conclude the event on which the option depends, you will actually have to buy or sell the property, even if other circumstances have changed. The key to avoid “Oh no, what I did!” It is important to ensure that the development of the option agreement is as watertight as a submarine. The duration of the option – The amount of the exposure – The condition or conditions that must be met for the right of option to be fulfilled – Amount of down payment and payment terms – Extension of the duration of the option, If applicable – The final purchase price of the property, if any – Dispute resolution procedure – Details of the termination of the deadline for each party option agreements under certain conditions are a good way for landowners to reduce the risk if a third party is interested in buying part of their land for development. However, poorly drafted agreements can be costly. Rural Real Estate Advisor Julie Liddle gives her best advice on how to do it right. As a landowner, you can use the skills, knowledge and means of an experienced developer. Since most “take” options are options, unless there is a serious drop in the market, or conditions related by planners to a successful agreement, are too stressful for the developer to pursue, you are sure of an interested buyer at some point in the future. An option gives the holder the right, but not the obligation to buy or sell an asset at a price calculated in advance according to a formula agreed in advance or at a fixed price.

Such agreements are often used for vacant land or land and for potential real estate development projects, or perhaps because the buyer needs time to raise funds, conduct more research or obtain a building permit.