New Option Agreements for Landlords and Tenants
Following the release of our new Option Agreements last month, we have now added to our Property portfolio a range of Option Agreements for Residential and Commercial Landlords and Tenants.
What is an option agreement?
An option agreement is a legally binding contract entered into by a landowner and a potential buyer. In the context of our new option agreements, the landowner is a landlord and the buyer is a tenant.
The tenant is granted an option to purchase the land contained in the tenancy. The option lasts until the lease or tenancy agreement expires.
An option agreement can be entered into at the same time as the grant of the lease or tenancy agreement or at a later date. Sometimes a clause granting an option is inserted into the lease or tenancy agreement; rather than go down this route, we have provided standalone option agreements that can be used in conjunction with a lease or tenancy agreement.
If the tenant decides to proceed with the purchase of the land they will give notice to the landlord. The price to be paid by the tenant is set out in the option agreement – either a fixed price or a price based on the market value of the land at the time the option is exercised.
Our new documents cover both commercial and residential property. Different templates can be used according to whether the price is fixed or to be determined based on market value. To complement these documents, there is also an Option Notice for a tenant to use when exercising an option.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.