Option Agreement (Buyer to Obtain Planning Permission)
This Option Agreement (Buyer to Obtain Planning Permission) can be used where a property owner wishes to grant an option over their land to a buyer who will make a planning application. If the planning application is successful, the buyer may exercise the option and. require the seller to transfer the property to the buyer. The option may only be exercised in relation to the whole of the land (not part or parts of it).
The price can either be agreed in advance and recorded in the agreement or can be expressed as a percentage of the market value of the land with the benefit of planning permission.
We have a simpler template, Simple Option Agreement, where there is no requirement for the buyer to obtain planning permission.
The grant of an option is not a straightforward transaction. Sellers and buyers should take legal advice before entering into such an agreement.
Clause 1 contains the grant of the option for the “Option Period”. An “Option Fee” may be payable.
Clause 2 provides for the buyer to have access to the property during the Option Period to carry out investigations and surveys.
Clause 3 relates to the application for planning permission.
Clause 4 sets out the mechanism for exercise of the option. The Standard Commercial Property Conditions (Third Edition) are incorporated in the template. These Conditions are widely used in commercial property transactions (and are similar to the Standard Conditions of Sale used for residential conveyancing). A copy of the Standard Conditions is available from the Oyez legal stationers website. Unfortunately we are not able to supply the Standard Conditions.
Clause 5 covers calculation of the Price as a percentage of market value.
Clause 6 deals with the seller’s legal title to the land.
Clause 7 restricts the seller’s ability to deal with the property (e.g. by selling it or granting leases) during the Option Period.
Clause 8 covers completion of the sale and purchase of the property.
Clause 9 deals with notices to be entered on the registered title of the property at the Land Registry.
Clauses 10 and 11 cover VAT and other standard legal matters.
This agreement needs to be signed by each party at the end. The seller and buyer may sign the same copy or one copy each.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Option Agreement (Buyer to Obtain Planning Permission) is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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