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Mark,
29 December, 23
The solicitor who was appointed to me was outstanding
Very simple to engage with instant confirmation in writing straight after. Daniel, the solicitor who was appointed to me, was outstanding in his approach, his understanding of the technicalities of the law and, crucially, a genuine care for the client. Would definitely advise using Lawhive, you won't regret it.
Tahir Idris,
04 October, 23
We were so pleased to find the Lawhive website
After struggling to find a solicitor willing to give us advice, and for a reasonable cost, we were so pleased to find the Lawhive website. At first we wondered how well it would work, but needn't have worried at all - the whole process was simple, straightforward and professional and great value for money. We felt extremely lucky to be matched with our solicitor, Sonay Erten, as she was exactly what we were looking for - knowledgeable, patient and kind - a refreshing change from solicitors we have used in the past. She showed a great deal of empathy for our situation and explained things in language that was easy to understand (rather than the usual "solicitor" talk, which can be intimidating). She's a shining example of what a solicitor should aspire to be and I wouldn't hesitate to recommend her to others or use her again in the future. We came out of our session reassured and confident of what we needed to do going forward, so a big "thank you!"
Julie Taylor,
01 June, 23
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I got the outcome I wanted regarding cease and desist to a competitor spreading defamatory statements about my business. Fast and professional, and at a much lower price than high street firms. Highly recommended thanks.
Jason Hunter,
23 July, 23
Very efficient! Can highly recommend.
I found the website very easy to use. Quick responses and I was even able to talk to someone who was friendly and competent. She rang me rather than emailed me. A solicitor was quickly found who could help me and once the relevant identification was approved he started work. Within two days the solicitor had checked documents and commented on them. Very efficient! Can highly recommend.
Pauline Piper,
15 February, 23
The service was fast and ultra professional
Sonay was really informative and understood my questions instantly, what I thought was complex Sonay simplified massively. She regularly checked in and the service was fast and ultra professional. Would highly recommend.
Jamie Crichton,
09 November, 23
Great service and very reasonably priced,
Great service and very reasonably priced, Kem was really helpful and professional. Would use again
Sarah Shanks,
21 November, 23
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About

An option agreement is a contract between a landowner and another party which gives them the right, but not the obligation, to buy land or property if certain pre-agreed conditions are met. For example, if planning permissions are granted. Solicitors can ensure that these agreements are legally binding and represents the interests of both parties.Next steps

How much does an Option Agreement cost?

The cost for a licensed solicitor to help with an Option Agreement is dependent on many factors including the complexity and specific requirements of the case. On average it is expected to range from £112-£149 but in some cases it could cost as much as £186.

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Option Agreement Solicitors

At Lawhive, our network of expert property solicitors is on hand to help you in drafting and reviewing an option agreement for fixed fees.

For more information, get a free case evaluation from our Legal Assessment Specialists today.

What is an option agreement?

An option agreement is a contract between a landowner and a developer that gives the developer the chance, but not the obligation, to buy the land within a set time frame.

In this agreement, the developer usually pays a nominal fee to the landowner, often as little as £1. The purchase price for the land may be agreed upon upfront, or there may be a method outlined in the agreement to calculate it later, usually based on the future value of the land with planning permission.

Benefits of an option agreement to a developer

Option agreements prevent a landowner from selling a property to someone else while the developer carries out checks to see if their project is viable.

If it is, the developer can buy the property by 'exercising' the option. This makes it mandatory for the landowner to sell and the developer to buy according to the terms of the agreement.

If the project isn't feasible, the developer can walk away without any penalties, letting the option expire.

Potential risks of an option agreement for landowners

An option agreement doesn't guarantee a sale. This can be a risk for the landowner because, in agreeing, they make a commitment for a set period with no solid promise of a sale at the end.

In some situations, developers can't get the necessary planning permission and they won't buy the land.

There are ways to mitigate these risks in agreeing, therefore, it's a good idea for landowners to find a solicitor to help with this kind of agreement to ensure they know all the risks and take steps to reduce them where possible.

Benefits of an option agreement to a landowner

In an option agreement, there is more risk to a landowner because the buyer might change their mind later.

However, if done carefully, option agreements can be a good way for landowners to profit from their land without dealing with planning or construction.

Furthermore, if after development a property or land's value increases, landowners might be able to share in this profit, even after the development is completed, with the addition of an overage agreement.

What is included in an option agreement?

An option agreement usually includes:

  • Names and addresses of both parties involved;

  • Detailed description and map of the property;

  • The 'option fee' paid to the landowner;

  • The 'exercise price' (aka how much the property will cost if the option is exercised);

  • How long the agreement will last before the option expires and the potential buyer can no longer exercise their right.

What costs are involved in an option agreement?

In option agreements, there are two main costs to consider:

Option fee

The option fee is paid by a potential buyer to secure the agreement. It is sometimes nominal, but it can vary based on the property and situation.

Exercise price

The exercise price is what the buyer pays when the option is exercised. Exactly what the option price is depends on the agreement. It may be:

  • Based on the property's market value when the option agreement is signed;

  • Based on the property's market value when the option is exercised;

  • Based on the site's development value at the time of exercising the option, adjusted for additional costs like professional fees, planning permission, and developer profit. This usually applies to development land.

Keeping the above in mind, it's usually a good idea to have a property or piece of land independently assessed by a qualified value to understand its market value and shape an option agreement.

Is a developer required to buy if they sign an option agreement?

No, the potential buyer isn't required to buy the land. They have the choice to exercise the option or not during the agreed 'option period.'

If they choose not to exercise the option during this time, the landowner keeps the option fee and they can go on to do what they want with the land, like sell it to someone else.

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Pay by the hour

Hourly charges mean costs are hard to predict and you could be charged more than you expect.

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How do developers exercise the option?

When a developer decides to buy a property or land under an option agreement, they serve an 'option notice' and pay a deposit.

At the point a buyer exercises their option, the sale and purchase contract become legally binding, and completion happens as agreed in the terms of the option agreement.

How long does an option agreement last?

The time frame for the option period depends on things like the size and development potential of the land.

Smaller plots usually have option periods of 1 to 3 years, while larger sites may need 5 to 10 years to fully develop.

Option periods can be extended if a project is delayed. For example, if a planning decision is still pending.

Possible alternatives to option agreements

Option agreements are widely used for development in the UK. However, other types of deals may be better suited to each party's goals. These include:

  • Conditional contracts;

  • Promotion agreements;

  • Overage agreements;

  • Pre-emption agreements.

Regardless of which option is taken, each agreement requires careful thought and advice from a property solicitor.

How can Lawhive help?

At Lawhive, our network of expert property solicitors can assist you in drafting and reviewing an option agreement for fixed fees. For more information, get a free case evaluation from our Legal Assessment Specialists today.

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