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Product ID: UK-PRopt04

(6 customer reviews)

This is a comprehensive option agreement to buy real property - land or buildings - in a straight forward, “plain vanilla” deal.

This agreement fixes the price and the exercise date so that there is no scope for argument.

It creates a full contract for sale and purchase subject only to exercise of the option by the buyer.

All variables are clear and in one place within the document.

User friendly text and includes invaluable user notes to guide you through to successful execution.

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Product ID: UK-PRopt12

(3 customer reviews)

This is a simple option agreement that creates a right to buy real property at a set price within a certain time period.

This version has been drawn specifically for situations where the buyer does not want to put the seller off the deal by giving him a document full of “legal” matters. Use if you fear that your seller may be overwhelmed. That way, you get a signature on this agreement.

Properly completed, signed and dated, this document is binding, but because this is a cut down version, there is less security for the buyer and there may be additional matters to consider in connection with the minutiae of the conveyancing process.

We include a template notice of exercise letter, to be used by a buyer to exercise the option before the expiry date stated within the agreement.

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Product ID: UK-PRopt03

Option to buy land and property: additional price

This option agreement provides for the exercise price to be paid in stages as the buyer's development proceeds. This enables the seller to share in any uplift in valuation between the date of the grant of the option and the (later) exercise date. The template also includes a detailed sale contract incorporating the Law Society's Commercial Conditions (3rd edition), with amendments tailored to this precise deal.

The ultimate sale price is not known in advance but is calculated after the event. For example, the buyer of the option wants to attempt to obtain planning permission. The seller wants a fair price - he does not want to see the buyer walk away with too large a share of “his” land value.

The price paid to the seller is calculated as a proportion of the increased value. The proportion is a matter for negotiation, reflecting the difficulty of raising the value and the risks and cost to the buyer in time and money.

The agreement provides for the option holder's task to be specified. It could relate to the grant of planning permission, the award of a licence, the outcome of an election, or a geological report.

An alternative agreement for this situation would be a conditional contract for a property sale. For the option holder, the attraction of this option agreement is that he can still choose to walk away even if the awaited condition is fulfilled.

This contract maximises the seller’s opportunity to share the profit without putting the option holder at excessive risk of over-paying.

Note that if the outcome is specific, like an application for a waste disposal licence, then the ultimate value can also be calculated accurately, so the sale price can be specific. In that case the option holder would prefer an option to purchase with extensions to the term or maybe a no frills comprehensive option like the next one below on this page.

An option buyer might use this document to give a property seller an additional incentive to act in some way to achieve the higher value outcome, or a seller might use it to ensure he or she shares in the whole profit and not just the first stage.

The present or proposed use of the land is not relevant to the agreement, so you can use this document for any real property transaction.

The document also includes an exercise letter template, which can be used by a buyer to exercise the option before the expiry date stated within the agreement.

Example uses of this agreement: for buying land or buildings with a view to development after:

  • planning permission (or other licence) has been granted
  • finding a tenant
  • negotiating with a local authority for a change in status of a listed part
  • a land or building survey has been completed
  • financing has been secured
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Product ID: UK-PRopt14

Option to buy land and property: in multiple phases

This agreement allows the option holder to exercise the option in stages so that he does not have to put out the entire exercise price in a single payment. He or she pays a fixed exercise price

Phases can be agreed in advance or calculated by reference to a proportionate part of the whole site.

Use this agreement on any occasion when you need to await some event. It could be simply planning approval, or it could be resolution of a dispute, grant of a licence relevant to this land, or simply an offer of financing.

The document includes protection for the buyer to prevent the option holder from controlling parts of the site which he has not yet bought.

It is suitable for buying any type of real estate, from agricultural land to derelict warehouses.

Example uses:

  • the buyer will apply for consent on a large area of land, only in stages because the local planning authority is unlikely to allow development of the whole land area
  • the buyer cannot fund the entire purchase before he has some cash flow from the first phase
  • the buyer believes that planning consent on later phases may not be forthcoming for some reason outside his control
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Product ID: UK-PRopt02

Option to buy land and property: extension of term subject to conditions

This is a basic option agreement with the addition of one provision: it can be extended by the option holder subject to two things.

The first is an additional payment to the land owner, and the second is some other condition that you specify.

Use this agreement when there is some outstanding event which is a “deal breaker” for the option holder, for example, a decision to install a new sewerage disposal plant or to divert a road. Using this agreement, the option holder can extend the option period to make sure the condition is satisfied before he has to buy the land.

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Product ID: UK-PRopt01

Conditional contract: property sale

This is a conditional contract – where the entire deal is under contract and both sides are bound subject only to one or more conditions being met.

A conditional contract is an alternative to using an option agreement. An option places the option holder (usually the potential property buyer) in control of whether the property is sold. A conditional contract tends to favour the seller in that he knows he has sold subject only to the condition being met.

The most usual condition is a grant of planning permission.

The document includes an option for the seller to receive an additional payment in the future. This top-up provision gives a seller a stronger incentive to sell because he will have a second “bite of the cherry” if and when the buyer is able to generate more value later. For example, if the buyer cannot obtain planning permission for the whole site and instead seeks planning permission in stages, the seller can benefit from the increase in value of the land as a result of the subsequent grants of permission.

The document also includes an option to include a guarantor if the buyer is a company.

Example uses of this document

  • for the redevelopment of an office building conditional on a tenant being found first
  • for the sale of a field to have houses built conditional on planning permission being granted
  • for a warehouse to be converted into a nightclub conditional on local authority permission
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Product ID: UK-PRove01

Overage agreement: seller version

This is a powerful overage agreement for a property seller to put to a buyer.

As every property professional knows, an overage agreement is a useful device to obtain the maximum value from the sale of land. The buyer can buy at a low risk cost and the seller will ultimate share the future development value in the agreed proportions.

The deal can be softened as necessary in order to accommodate the buyer.

The document is suitable for any site or plot with possible future development value.

You could incorporate the terms into the contract for sale or use this document as a stand-alone agreement.

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Product ID: UK-PRove03

Overage agreement: buyer version; simple

This is a complete and practical overage agreement for a property buyer to put to a seller as an incentive for the seller to sell his land.

The agreement can be as soft as the buyer wishes. The document is drawn as a simple version so that the buyer can minimise his future obligations.

This is a comparatively simple version in which the seller’s rights do not pass from the present buyer to a future buyer. The effect is that the present buyer is bound for the overage period, but can sell a title “clean” of the attached overage.

The calculation of the overage payable is simple, in that it bites only when a planning consent increases the land value by a given sum. It thus avoids the possibility of multiple small overage charges.

The aim of this agreement is to provide a framework which entices the buyer to develop and not one which ensures that he does not develop.

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Product ID: UK-PRove02

Overage agreement: buyer version; concessionary

This is a fair and practical overage agreement for a property buyer to put to a seller in response to seller's request for an overage payment. It can be used for any transaction, large or small.

It is strongly in the interest of the buyer to produce the first draft of the contract. The parties can then negotiate the finer points based on that contract.

This agreement provides for payments on repeated sales over however many years you wish. However, the buyer should avoid being drawn in to a long overage period, because a future owner of a developed part, such as a house of workshop owner, may have difficulty in finding a lender on “overaged” property.

The aim of this contract is to provide a framework which entices future owners to develop and not one which ensures that they do not develop.

The advantages of the agreement to the buyer are:

  • interest is not payable from the moment planning permission is granted
  • overage does not bite on the value of buildings but only on an increase in the land value
  • there is no obligation for the buyer to try to register the agreement at the Land Registry
  • in calculating overage, credit is given for money expended in obtaining the permission, such as professional and planning fees, ecological report and so on
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Product ID: UK-PRopt09

Option to buy land and property: extension of term for a fixed length of time

This option agreement builds on our standard agreement by providing for the option holder to extend the term of the option for a fixed length of time at a later date in return for an additional payment to the seller.

This template mitigates against the risk that the future event that is expected to increase the value of the property doesn’t occur as quickly as originally envisaged. It is therefore useful in situations where timing is uncertain.

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