An option agreement helps in a business situation where there is a buyer and a seller regarding property. The option agreement legal document will allow a buyer the option to purchase a piece of land or a building. This option is meant to last for a certain period of time and both seller and buyer must agree to the terms of the option agreement. It is easy to understand what an option agreement is with an example.
You have a piece of property which has sat vacant for five years. You decide that it is zoned for commercial use and you want to sell. Six months ago a buyer was interested in the property, but you had not decided to sell. So you signed an option agreement stating in the next year if you decided to sell the interested buyer would have the chance to buy the property from you before any other offers could be considered.
The option agreement is very comprehensive in what is required under UK law to make the agreement legal. In an option agreement the buyer typically offers a deposit on the property that is non refundable. The seller gets to keep the money in the event the buyer falls through. Normally in the option agreement there will be a sale eventually, which is why money exchanges hands.
Another example of an option agreement is where the buyer approaches a seller and there are no contracts on the property. The buyer needs time to come up with the selling price, say six months. The seller agrees for a down payment and a signed option agreement that will give the buyer six months to finance the sale. If the buyer comes up with the money the property sale is completed. If the buyer does not have the funds the seller can go with another buyer.
Our site offers a DIY document template for the option agreement. This template is a general version of the option agreement, meaning it is non- specific. It can be modified within UK laws regarding the option to buy property. You will be able to make these changes, but if it is a complicated change you may want to speak with a solicitor. The document template has been drafted by a solicitor, so you may find only small clauses need to be added. Certain things like the date the sale will occur and the deposit amount should be changed with each sale. The option agreement once sided will hold up in a court of law. If there are specific agreements made verbally they should also be spelled out in the contract.
The option agreement does not have to be registered with the municipal courts, but it is a good idea for there to be three copies. One copy should be kept by the buyer, the other with the seller, and a third copy with a solicitor in order to ensure no party can complain regarding the signing of the document. An option agreement can also be used in a personal situation. If you are an owner of a home and you have a buyer you can enter into an option agreement.
You can give the buyer a period of time to come up with the selling price just as if it was for commercial property. However, the document here is more for commercial use. An option agreement should only be used if you can afford to wait for the sale to go through. Also, if you enter into an option agreement you can still look for other buyers, but full disclosure is needed that you have a contract on the property.