Option agreements—the need for a long-stop date
Option agreements—the need for a long-stop date

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Option agreements—the need for a long-stop date
  • Why might a developer delay?
  • Will the landowner be held to an open-ended option period?

Call options are frequently used by developers to secure a right to buy land if planning permission is obtained. Taking an option provides the developer with time to make and pursue a planning application before having to commit to paying for the land. The developer's initial outlay will be limited to payment of an option fee, which is essentially the sum agreed with the landowner as the price for agreeing not to sell the land elsewhere while the developer seeks planning permission.

The developer is likely to incur significant expense in making and pursuing a planning application. High on the developer's list of priorities will be the inclusion of clauses allowing the developer to extend the option period if the planning process is still underway. Option agreements commonly provide that the option period can be extended where:

  1. an application has been made, but no planning permission or refusal has yet been made

  2. planning permission has been granted, but the developer wishes to appeal against an onerous condition

  3. planning permission has been granted, but the period for possible third party challenge or judicial review has yet to expire, or

  4. planning p