Option to buy land and property: extension of term for a fixed length of time

This option agreement builds on our standard agreement by providing for the option holder to extend the term of the option for a fixed length of time at a later date in return for an additional payment to the seller. This template mitigates against the risk that the future event that is expected to increase the value of the property doesn’t occur as quickly as originally envisaged. It is therefore useful in situations where timing is uncertain.
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About this document

This agreement creates a call option where the developer buys the right to purchase the property at a given price within a certain period of time.

It also includes a provision for extension of the exercise period for a fixed length of time in return for an additional payment to the seller.

When to use this agreement

Using option agreements to buy land or buildings for development allows an agent or a developer to minimise risk, whilst at the same time providing the seller with a payment regardless of whether the developer exercises his or her right.

It can help incentivise a property owner to cooperate in securing the future event the developer is seeking and, depending on the sale price agreed, let the buyer purchase at a discount to future market value.

This document is likely to be used in situations where an event for which the option holder is waiting (such as grant of planning permission) could be delayed, and the holder wants to reduce the risk that his or her right to buy might end before the event.

You might use this agreement for buying land or buildings with a view to development before:

  • planning permission (or other licence) has been granted
  • finding a tenant
  • negotiating with a local authority for a change in status of a listed part
  • a land or building survey has been completed
  • financing has been secured

This agreement can be used for securing an option on any type of land and buildings, and with a view to buying the property for any reason.

Alternative templates

Net Lawman specialises in property option agreements. You can find our complete range of templates here.

Contents

  • Carefully and simply defined terms
  • Specific data on money and timing
  • Sellers warranties as to the current planning status of the land
  • Seller must not take actions that might prejudice the buyer’s work
  • The essence of the agreement - exercising the option
  • How the extension works
  • What the buyer may do and must do
  • That the agreement may be assigned by the buyer
  • A director’s guarantee, in case the seller is a company
  • Indemnities
  • Recourse against buyer is limited
  • A separate draft letter giving notice to exercise the option
Draftsman

This document was written by a solicitor for Net Lawman. It complies with current Irish law.

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