An option agreement is an agreement entered into by the seller of a property and a potential purchaser which states that upon the happening of a ‘certain event’ the potential purchaser will have the guaranteed right to buy the property within a set time frame or on a set date in the future.
An option agreement is a legally binding contract and the prospective buyer usually pays a non-refundable deposit to the seller in exchange for the option to purchase the property under the terms of the agreement.
In what situation would a buyer enter into an Option Agreement?
A property developer may approach a landowner with an interest in purchasing some or all of their land and enter into an option agreement which is conditional on being granted planning permission for the proposed development.
Another example would be if you, as a developer, wished to purchase a property but needed some time to raise the finance. If the seller has no other offers or is in no hurry to sell they may be prepared to enter into an option agreement whereby you have six months to raise the money and purchase the property. If you are unable to organise finance in this set period of time then the option will lapse and the owner can put the property on the market.
How can Bennett Oakley advise on Option Agreements
At Bennett Oakley Solicitors we can assist you with the legalities of an option agreement and ensure that the terms are documented correctly. For example, if the option is to be granted pending the granting of planning permission, we will ensure that there is a provision in the contract for any possible appeal if planning permission is denied.