This is a ‘put option’, an obligation on the buyer to buy within the option period (exercisable by the vendor who has paid the prospective purchaser a sum to take the obligation to buy). In comparison, a standard or regular option is a right to buy (exercisable by the buyer) within the option period, exercisable by the prospective purchaser at will.

Put another way, this is a comprehensive legal document setting out the terms and conditions for an assignable and time-limited right on the part of a landowner to call upon a prospective purchaser of the land to buy it at an agreed pre-determined price. The purchaser is paid an option fee to bear this obligation which is called a ‘Put Option’. The terms of the agreement set out the granting of the right, the terms of the exercise notice to be served on the purchaser, the conditions of sale and a provision preventing the owner from creating incumbrances over the land in the option period.

The document also sets out the usual legal provisions in such an agreement, including dispute resolution and payment of any VAT which is payable in respect of the land as a result of development.