Property development Solicitors
When a developer identifies a suitable site for, say, residential development, the developer wants to ensure that it has the right use for that site.
A developer will probably not want to commit to buying the site and incur the associated costs until it has for example obtained planning permission for the site. As you can imagine, developers also face stiff competition from other developers, and therefore they are under pressure commercial to contractually secure sites as quickly as possible.
The developer’s tool box.
There are a number of legal ‘tools’ that seasoned developers regularly utilise to secure sites without actually having to buy them.
The developer might enter into a conditional contract with the landowner to buy the site at a future date. The conditions might include, for example, the developer obtaining the required planning permission.
When the developer has obtained the necessary planning permission, meaning the contract is no longer conditional, the developer might be obliged to purchase the site at that time.
Option Agreements (or Land Options)
Alternatively, the landowner and the developer might enter into an option agreement. The terms of the option agreement will be largely the same as the conditional contract but an option agreement will usually give the developer the right to terminate the option agreement at any point.
Even if the developer has all the necessary consents required to develop the site it should not be obliged to exercise the option.
Pre-emption (or right of first refusal)
Developers can also secure a pre-emption right over land which is a right of first refusal. With these agreements there is usually no obligation on the developer to buy the land, but also nothing compelling the landowner to sell, and therefore developers often prefer the option agreement route.
Are you a developer?
If you’re interested in obtaining options over sites, or looking to utilise some of the ‘developer’s tool’ outlined above or perhaps you have been approached by a developer, then contact Kerseys Solicitors who will be able to assist.
Kerseys Solicitors LLP have been advising clients since the year 1881 making it one of the most established firm of solicitors in Ipswich, contact at Commercial Property Solicitor