Options to Purchase for Residential Tenants
The documents in this folder are for use by residential landlords and tenants in England. 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 commercial landlords and tenants who wish to enter into an option agreement. Please see our Commercial Property Management group of documents.
Options to Purchase for Residential Tenants is part of Property. Just £38.50 + VAT provides unlimited downloads from Property for 1 year.
Frequently Asked Questions
What is an option to purchase and how does it work? +
An option to purchase gives the tenant the right, but not the obligation, to buy the property at an agreed price, or on an agreed pricing basis, within a set period. If the tenant exercises the option in time, the landlord is bound to sell on the agreed terms. It differs from a contract of sale, which commits both sides, because only the tenant can decide whether to go ahead. These Simply-Docs documents are for residential landlords and tenants in England who want to grant an option over the freehold.
How does the tenant exercise an option to purchase? +
By serving an option notice on the landlord within the option period and in the manner the option agreement requires. Exercising the option converts it into a binding contract of sale on the agreed terms, after which completion follows like any purchase. Timing and form are critical: an option not exercised strictly in accordance with the agreement, and within the period, can lapse. Simply-Docs provides an option notice for the tenant to exercise the right.
Should an option to purchase be protected at the Land Registry? +
Yes, protect it or risk losing it against a buyer. An option to purchase is an estate contract, an interest in land that can bind a later buyer of the property only if it is protected. Where the landlord's title is registered, the option should be protected by entering a notice on the register at HM Land Registry. Where the title is unregistered, it is protected as a Class C(iv) land charge under the Land Charges Act 1972. An unprotected option may not bind a purchaser of the freehold, leaving the tenant with only a claim against the former landlord.
