Commercial Property: Land Options

Commercial Property: Land Options

By:


Land options are becoming an increasingly popular way for landowners and developers to work together. Nevertheless, the process is becoming more complicated, and there are potential risks for each party. So whether you are a landowner or a developer, you should seek expert legal advice before committing to an agreement.

Option Over Land: How Does It Work?

A land option is where a landowner gives a developer the option of buying their land, on the basis that the developer secures planning permission for the site. In return, the landowner will get an above market offer.

There are two different types of option. Firstly, a 'Put Option' sees a landowner give a developer a 'grant of an option over land' which is then registered with HM Land Registry. This option will be held in place for an agreed amount of time, although this period cannot exceed twenty-one years. The developer will then promote the site for development via the necessary channels. If planning permission is granted, and the developer wants to go ahead with the purchase, the landowner must then sell at the agreed price.

The second type, a 'Call Option', differs to the above in that the vendor is able to start the process. This means that if the necessary conditions have been obtained, then the landowner can demand the developer to make a purchase. This therefore increases the liabilities of the developer, as they become legally obliged to buy the land at the agreed figure.

If You Are A Developer.

Land options can be beneficial for developers, as it gives you time to process a planning application while protecting the land from being bought by another party. With a put option, if you are not successful in gaining permission for development, or you do not want to carry out the deal, then you do not have to buy the land. On the other hand, if you are successful in satisfying the conditions of the contract, then your right to buy is absolute.

However, as a developer you will have to take the risk that permission will not be granted, which will then cost you time and money.

If You Are A Landowner.

If you are a landowner, a land option gives you the advantage of being able to use the site while the developer does the hard work with the planning authorities. Furthermore, land that has consent for development will be worth considerably more money than without, allowing you to make a profit.

Nevertheless, if the option is validly exercised and the terms laid out in the conditional contract are adhered to, then you are legally compelled to sell your land.

Seek Expert Advice.

Land options are becoming increasingly complex, which is why it is essential to seek expert advice before you sign a contract. You need to be fully aware of how the process works, the terms and conditions, and the requirements of both parties. If you fail to do so, then it may prove costly.

About the Author:
Need specialist advice about Landlord And Tenant Laws?



If you are looking for friendly and approachable Birmingham Solicitors, we can help you.



Gary Storer is Practice Manager for Pearson Rowe Solicitors Birmingham.



Article Originally Published On: http://www.articlesnatch.com


Tags: , , , ,

|

Loading...
Related....
Videos...

Recent Legal Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.