I have a piece of garden that I don’t need. A Developer, who might buy it, has given me an Option to sign. What is this and should I sign it?
The simple answer is don’t sign any such Agreement without seeking specialist legal advice. An Option, as its name suggests, gives the Developer an option to buy the land at a given price and within a given period. Almost invariably, they will wish to obtain Planning Consent before being committed and you will need to establish exactly how long they will have to do so. Except in rare cases, the creation of an Option will prevent you from selling the property or re-mortgaging. In a falling market, there is also the possibility that the Developer will endeavour to re-negotiate the price at the last minute.
It may be preferable for you that the Developer enters into a Contract, conditional upon it getting the Planning Consent it requires. This is often better for a Seller as it means the Developer has to buy at the agreed price if the right Planning Permission is obtained. There is no room for re-negotiation on price.
Where part of the garden is being sold, it is also important at the outset to establish the terms of any ultimate Transfer Deed to cover rights for the passage of services and any required covenants. There is a lot to consider and thus a specialist Solicitor should be consulted immediately when you are approached.
For further information regarding Options for Land please contact the Commercial team.