Options to Purchase for Commercial Tenants
The documents in this folder are for use by commercial landlords and tenants. The folder contains Option Agreements and an Option Notice for use where the landlord wants to grant the tenant an option to purchase the freehold.
The grant and exercise of options over land is a legally complex area. These template documents should be used by customers who fully understand their nature and effect. Professional advice is likely to be required.
A separate selection of documents is available for residential landlords and tenants who wish to enter into an option agreement. Please see our Residential Landlords group of documents.
Options to Purchase for Commercial Tenants is part of Property. Just £38.50 + VAT provides unlimited downloads from Property for 1 year.
Frequently Asked Questions
I want to give my commercial tenant the right to buy the freehold later. How? +
Grant an option to purchase. An option agreement gives the tenant the right to buy the freehold during a set period, at a price or by a formula agreed now, which the tenant triggers by serving an option notice. It binds you to sell if the option is exercised. This sub-folder has option agreements and an option notice.
Is an option to purchase land legally binding, and should it be protected? +
Yes. An option to buy land is a contract to dispose of an interest in land, so it must comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. To bind a future buyer of the freehold it should be protected by registration, usually a notice at HM Land Registry. This sub-folder's option agreements are drafted with these requirements in mind.
How is the purchase price fixed in an option agreement? +
However the parties agree. The price can be a fixed sum, open market value at the date of exercise or a formula, and the agreement should say how any valuation dispute is resolved. Getting the mechanism clear now avoids argument when the option is exercised. This sub-folder's option agreements set out price and exercise terms.
How does the tenant actually exercise the option? +
By serving an option notice in the way the agreement requires, within the option period. Strict compliance matters, because a late or defective notice can fail. The agreement sets the timing, form and where to send the notice. This sub-folder includes an option notice template alongside the option agreements.
Is an option to purchase complex enough to need professional advice? +
Yes. Options over land are legally complex, affecting price, tax, registration and the interaction with the lease, and Simply-Docs recommends these templates only for customers who fully understand their nature and effect. Professional advice is likely to be needed. This sub-folder provides the option documents for use with that advice.
