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What is Option to Purchase agreement?
When investing or promoting potential development land the most cost effective method for us is to enter into an “option to purchase” agreement with you. This is where the land remains in your ownership and the option to purchase is only triggered once planning is achieved.
- It binds two parties (a prospective vendor Landowner) and a prospective purchaser) together exclusively for a specified period of time.
- The option is legally registered at HM Land Registry alongside all the details of the time and financial agreements.
- We pick up all the costs of planning.
- If the conditions for exercising the option are satisfied,(ie. achieving planning permission within the time frame) we can exercise the right to purchase (call option) at the agreed purchase price.
- The purchase price may be either a fixed sum or a percentage of the new land value (assessed by and independent surveyor)
- As an alternative to exercising the option to purchase we may decide to work with you to market the land and find an alternative purchaser. In this instance the revenue agreements still remain in place as before.
Who owns the land?
You own the land until such time as either option is taken up. If the option lapses then you continue to own the land as before.
Do I have an input into the planning application?
You can be involved as much or as little as you wish. Our main role is to maximise the value of your land however a sketch scheme will be provided during the pre-agreement process to ensure you’re comfortable with our scheme.
What happens if planning permission is not achieved?
If planning permission is refused and no alternative scheme is viable then the agreement simply lapses.
Will I ever be expected to contribute to the costs?
No, we will pay for all associated costs of planning.
Do I need a solicitor and who pays their costs?
The Option to Purchase agreement requires the engagement of conveyance solicitors on both sides. We will give you a legal fee contribution of £500.00 once the documents are signed.
Is the company committed to working on my planning permissions?
There are a number of reasons why we are committed to achieving planning permission in the shortest time. Firstly we appreciate that planning policies are always changing, and time is of the essence. Secondly, we both have the same objectives; to achieve the maximum value of the land in the shortest amount of time because we are carrying all of the costs. Thirdly we know that the option agreement has a defined end date.