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ARTICLE · 27 JULY 2023

Option Agreements And Considerations For Landowners

Herrington Carmichael LLP
Herrington Carmichael LLP
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Herrington Carmichael LLP

Herrington Carmichael LLP

The origins of the practice can be traced back over 180 years in Wokingham and 150 in Aldershot. It...

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An option agreement is where a prospective buyer, in this case the developer, enters into an agreement with a landowner for the right to buy their land. The developer then has the option...

United KingdomReal Estate and Construction
Tim Hardesty
Tim Hardesty
Dil Vajaria
Dil Vajaria
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What is an option agreement?

An option agreement is where a prospective buyer, in this case the developer, enters into an agreement with a landowner for the right to buy their land. The developer then has the option (within a period defined in the agreement) to buy the land. It is important to note that the developer has the option to purchase the land and is not under an obligation to do so. The developer will usually pay a sum of money to the landowner for the right to exercise the option, known as an option fee.

Why is an option agreement used?

Option agreements are a popular choice for developers as the option period allows the developer to pursue a planning application for their desired project without the risk that they will be obliged to buy the land without the benefit of planning permission.

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