An option contract is a form of land sale contract. As far as contracts are concerned, option agreements are a curiosity, as the content or purpose of the contract will not be concluded for a period of time, in some cases, several years. This assumes that the option will be exercised naturally and that the contract is usually concluded! Under a promotion agreement, the developer can avoid paying the option fee or non-refundable surety – a nice benefit if he sits on the same side of the bargaining table as the landowner. However, it would be customary for the developer to cover the legal costs of the landowner when the promotion contract is concluded – which is similar to option contracts. She has developed a particular expertise in managing complex real estate development issues, including transportation contracts. Option agreements are therefore the most widely used and most landowners are familiar with this model. As part of a grant agreement, the developer first uses his expertise to promote the land or land for development in general as part of the local planning plan, and then obtain the building permit. The building permit would generally be for the form of planning agreed with the landowner – of course, this must be viable and appropriate for both parties. The developer (developer) then promotes the property (with planning permission) on the open market for sale.
A promotion contract includes a general obligation to promote a site for developer risk planning. Sometimes he also sees for the marketing and sale of the site. The agreement is often reached at a relatively early stage of the planning process and the definition of “development” can be quite confusing. The owner of the land relies on the know-how of the developer. Advertising contracts will be more attractive to developers and sourcing agents, especially in the current climate, with a high acquisition cost related to stamp duty and financing. Under this agreement, a developer assumes responsibility for securing the building permit and also has the option to purchase the land at a given point (usually once the planning is complete). The purchase of the developer is made at an agreed price that generally reflects the market value of the land, net of compensation for the guarantee of the building permit and perhaps instead of a levy that would otherwise have been levied. Options are usually time sensitive and a fee can be paid to back up the option, as well as extend it if necessary. Some developers may require that an option or pre-purchase be included in the transportation contract so that they can purchase the property themselves once the planning is complete. Land support contracts are considered a good half-house between a joint venture and an option and are currently very favourable. In short, a transportation contract provides for the developer to apply for the building permit and market the sale of the land as soon as the design has been made, as the landowner is generally only required to sell the land once permission has been granted.
If the developer successfully obtains the building permit, he usually receives a percentage of the increased value. If you have mature land for development, how are you going to get the best possible return on its value? If you don`t have experience in design and construction, you`ll probably need the expertise of a professional developer to increase the value of the land. The two most common ways to organize it are an option or promotion agreement. Everyone has advantages and risks, and specialized legal advice is essential to make the right choice and ensure that a well-developed agreement is reached to protect your interests. Iain concludes that LPAs are beneficial to both landowners and potential buyers – as it maximizes returns and sells the land at an optimal time for both landowners and developers.