Option, Pre-emption and Overage Agreements

We can help you if you are looking to make longer term plans in respect of property, being experts in Option Agreements, Pre-Emption Agreements and also agreements securing Overage payments.

Option Agreements

Under an option agreement, a person is given a right to buy a piece of land, usually for a certain piece of time. The price may be fixed or determined by a valuation at the time at which the purchase takes place. One the Option Agreement has been put into place, the seller is not normally able to prevent the sale from taking place once the option holder has confirmed their intention to buy the property.

Pre-Emption Agreements

Also known as a ‘right of first refusal', this differs from an Option Agreement, in that the owner is not compelled to sell the property once the buyer has confirmed their intention to buy. Instead, the potential buyer is only able to buy the land once the seller is ready to sell the property. The pre-emption right means that, if the owner decides to sell the property, the potential buyer must firstly be offered the property before it can be sold to anyone else.

Overage Agreements

Overage, or ‘clawback' provisions are normally used where land is sold and the seller believes that there may be the potential for valuable redevelopment of the land in the foreseeable future. For instance, if derelict or other vacant land is given planning permission for redevelopment in the future, it will become much more valuable. Overage agreements are used where the seller wishes to take a share of this increase in value. This is a specialist area and requires considerable care and expertise, as there are many pitfalls arising from these arrangements.

If you require further information on any of these issues, please feel free to call us on 0113 236 2334 to discuss your needs.