Do you know your option from your elbow?


How many times have you heard a landowner say he has agreed an option agreement over his land with a developer (for either housing or renewable energy)? It makes you think his luck is better than yours… not necessarily!

There are so many pitfalls to avoid in negotiating an option it’s easy to get tied into something that is not good to work with. Of the many considerations here are just a few:

  • Have you consulted your bank or whomever has a first charge over the property?
  • What is the area under option? It has been known to cover the whole farm not just the subject area
  • Is the option extendable and under what circumstances? Do you get an extra payment for this?
  • Do you have retained access to services?
  • Is it a tranche purchase or is it going as a whole on the first planning consent? This makes a huge difference.
  • If it’s for renewable energy, did you agree a decommissioning period – and who is paying?
  • Is your accountant fully aware of everything so they can do some tax planning for you?
  • What is overage? Is it something you should consider given the type of development proposed?

There are many, many more matters to consider. Don’t just expect all concerns to be picked up when the option is being drafted. It may be too late.