Option Agreements introduce flexibility to a transaction as they give a buyer the right (for a set period) to buy or lease a piece of property on agreed terms.
Developers frequently use them as a means of securing land earmarked for development prior to planning permission being granted.
The most commonly used form of Option Agreement is a ‘Call Option’. Here, the buyer can essentially call upon the seller to sell the land pursuant to the option. This would ordinarily occur when planning permission had been obtained.
Option Agreements can be seen as being more attractive than conditional contracts given that the buyer is fully in control and can simply walk away from the deal if it becomes unattractive (e.g. where costs have risen or end-sale prices have dropped).
If you’d like to discuss option agreements in more depth contact our commercial property experts today.