Browse our Options and pre-emption agreements Services
Bury & Walkers’ commercial property solicitors act on behalf of land owners and developers in connection with options, pre-emption agreements and overage agreements. Our experienced team deliver a personal and commercial service to clients throughout Yorkshire and beyond.
Option Agreements
An ‘option agreement’ is entered into between the owner of a property and a purchaser if it is anticipated that the land (or building) may be developed at some point in the future.
The option agreement provides a right to buy the land for a price identified in the agreement for a set period of time and commonly an ‘option sum’ is paid to the land owner at that time to secure the arrangement.
Developers often use option agreements when putting together development sites. They may want to delay their acquisition of the land concerned until they obtain planning permission or, perhaps, acquire land from an adjoining owner. There are often provisions allowing the developer to apply for planning permission and clauses dealing with planning appeals. It is unusual for the land owner to be able to dispose of the property until the expiry of the option agreement. However if they do, it is usually on the basis that the new buyer also purchases the property subject to the option agreement.
Pre-emption Agreements
A pre-emption agreement is an agreement which is sometimes known as a “right of first refusal”. The land owner enters into the agreement with the developer and gives the developer a right to buy the property if the owner proposes to sell the same within the period set out in the agreement.
It is usual for the developer to pay at least the price to be paid by the third party buyer in order for it to exercise its right of first refusal to buy the property.
Overage
Overage is a concept that is used to allow owners to share in any increase in the value of their property at some time in future. Overage provisions can be included in option agreements or pre-emption agreements and provide that the owner will be entitled to a percentage of any increase in value of the property after it has been acquired by the developer.
Where a developer has successfully developed the property/land achieving an increase in its value, the overage clause enables the original owner to benefit financially from the uplift in value, usually via its subsequent sale.
Land promotion agreements
If you are a land owner or developer, we can assist you with the drafting and execution of land promotion agreements. A land promotion agreement is used where a developer agrees to apply for planning permission for a proposed development on the property and then to market the property once it has succeeded in obtaining planning permission.
The developer is likely to incur substantial costs in obtaining planning permission and marketing the property. Land promotion agreements include detailed provisions relating to the obtaining of planning consent, statutory agreements, and a disposal strategy, together with details as to how any eventual sale proceeds are divided between the parties.
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