Land Sales & Purchase Options

People who are looking into purchasing land often wish to ‘lock in’ the other party to the accepted offer, which is normally done by granting the pre-emption rights over its acquisition or giving the prospective buyer the option to purchase the land.

Use of Options or Pre-emption Agreement?

There are significant differences between the two arrangements, which are:

The use of options to purchase the land is subject to the occurrence of certain events for a limited amount of time. If these events occur, the right to purchase is absolute.

If the owner of the land decides to sell within a pre-emption period, the pre-emption agreement gives the prospective buyer the right to be ‘first in line’ ahead of others.

For the option to be legally binding, the agreement must be in writing and signed by both parties. This is so that the option is considered to be a conditional contract for the sale of land.

The pre-emption agreement does not have to be made in writing for it to be legally binding (although it is better for both parties if it is in writing). A contract must be created and signed when an offer is accepted for the sale by the landowner.

Another difference between the use of options and pre-emption agreements is the tax positions. This information would need to be obtained from an FCA-regulated individual, as we are not regulated to provide Tax Advice.

We can offer great advice for those looking for information and help with this type of legal work.

If you would like more information, please contact our team of lawyers on 0121 803 4665, and we will be happy to answer any queries you may have.