What Is A Option Agreement

Duration: A typical option agreement is three to five years, but it can be extended or extended if a developer`s planning application is underway. Therefore, you should think about the impact that a lengthy planning process can have on your farm plans and whether you are entitled to additional payments if it takes longer than expected. A timetable for the promoter`s commitments should be included so that both parties are clear about what is expected and when. A conditional contract is a binding agreement that requires the buyer to acquire the land as soon as certain conditions are met. The most common type of the condition is the granting of a satisfactory building permit. “Conditional precision cases” determine the date on which the contract becomes unconditional, the date on which the buyer must fulfill his contractual obligations and conclude the purchase of the land. If you want to sell your property for $500,000, you can divide that sale price into the signed document to ensure that you reach your goal of selling the property for the agreed amount. By signing the option contract for this amount, you agree to sell your home at that price to the potential buyer with an agreed schedule, regardless of what the market does. The potential buyer could deviate from the agreement, but the seller does not have the option to sell the house within that time frame without first offering the option agreement to the buyer. A developer may agree the purchase price with the landowner at the beginning of the option contract. This means that it is the security of upfront costs and developers may end up paying less than the market value. However, each price is often subject to the deduction of unforeseen costs.

Purchase price: To avoid surprises, be sure how the purchase price is calculated and whether the deductions apply to unusable parts of the land, or “allow” these development parts? They will also want a provision of the agreement to ensure that the plan will only continue if a minimum requirement or a minimum selling price is met. An option contract is a contract that gives a party the right to purchase land or land often linked to a specified period of time.