Backing up an option agreement also reduces the risk for the developer. If obtaining the building permit takes longer than expected, the developer can be sure that he has a legally binding agreement that will prevent you from getting frustrated and changing your mind about this whole matter. Note that if the result is specific, such as an application for a disposal license, the final value can also be calculated accurately, so the selling price can be specific. In this case, the option holder would prefer a call option with extended life or perhaps a full no-frills option like the following at the bottom of this page. There are many more things to keep in mind than those mentioned above. Don`t expect all your concerns to be taken into account when the option is designed. By then, it may be too late. Things like overtaking, for example, are incredibly complex and need to be handled by an expert. With accurate design, option agreements and can offer both developers and landowners security, no matter how unpredictable the future is.
Option agreements are a good way for landowners to reduce risk when a third party is interested in buying part of their country for development. However, poorly drafted agreements can be costly. Rural real estate advisor Julie Liddle offers her best advice on how to do it right. This version has been designed specifically for situations where the buyer does not want to discourage the seller of the business by giving him a document filled with “legal” questions. Use them if you`re worried that your seller will be overwhelmed. You will thus obtain a signature of this agreement. The current or proposed use of the land is not relevant to the agreement, so you can use this document for any real estate transaction. Example of application of this agreement: for the purchase of land or buildings for subsequent development: a conditional contract is an alternative to the use of an option agreement.
An option gives the option holder (usually the potential buyer) control over the sale of the property. A conditional contract tends to favour the seller, knowing that he has only sold on the condition that is met. Simply put, an option agreement, when used for development, is a way for landowners to achieve an increase in land value without bearing the considerable costs of obtaining building permit. This risk is taken by a developer who, if successful, allows both parties to get a percentage of the increased market value. . . .