If the landowner and option holder cannot agree on a purchase price, there should be provisions in the dispute settlement agreement. As a general rule, a duly experienced independent expert or arbitrator is appointed, who is also a chartered surveyor. The expert can be agreed between the parties or appointed through the RICS. If the triggering event is the granting of a satisfactory planning authorization, the proponent can complete its plans and diligence before the option is exercised. The agreement should also allow the developer to be flexible in purchasing without waiting for the plan to be final. This can be important if, for example, a rival developer is interested in the area where the country contains a useful ransom band or if there is a fixed longstop date that cannot be extended. When registering the land, the option should be an agreed or unilateral market notice and a limitation of ownership in the land registry. For non-registered land, the option contract should be registered as a basic category iv tax. If this is not the case, a third party may acquire the land without the option. The expert should then determine the purchase price, with the option holder then deciding whether or not to purchase the land at the fixed price. The option agreement refers to a fixed purchase price or contains a method for determining the open market value of the land on a given date (usually, as soon as a satisfactory planning authorization is available). The price will be a percentage of that number, minus the indicated development costs.
It is customary for the agreed purchase price to be indicated in the contract notice, so it is essential that the valuation method be clearly defined in the option agreement, including assumptions and non-compliance. Landowners often confuse option agreements with pre-purchase contracts. The latter give the potential buyer the right of pre-emption only if the seller decides to sell it, while an option contract is a legally binding contract. In other words, if you manage to complete the event that conditions the execution of the option. B, for example, get planning approval, you will have to sell your country, even if other circumstances have changed. That`s why good preparation is so important. One example would be that the agreed purchase price be reduced to reflect the additional costs incurred by the developer for the rehabilitation of polluted land. The option agreement may include provisions requiring a definitive accounting of costs and profits, so that if the final value is greater than the underlying, the landowner receives an additional payment in the event of a practical completion or on a specified date after that date. A purchase option that may be exerciseable when granting a particular planning authorization should be avoided, as it is too restrictive and may become unnecessary if land plans are to be modified after due diligence or modification requested by the planning authority.
Land options are a good way to guarantee no obligation to purchase rights. They can be simple or complicated. An option must be made in writing and may be an agreement or agreement, provided that the payment of an option fee is included. The advantage of an option, not a conditional contract, is that the buyer is not required to exercise the option.