What does an option agreement mean for a landowner?
An option agreement can give a buyer or developer the right to purchase land within an agreed period, often after pursuing planning permission. This can be sensible in the right circumstances, but it can also tie land up for years if the terms are not right.
Questions to check
- How long is the option period and can it be extended?
- Is the price fixed, formula-based, discounted from market value or independently valued?
- Who pays planning and technical costs?
- What happens if planning is refused or a better buyer appears?
- Are there overage, clawback or minimum price protections?
- Does exclusivity prevent you testing the market?