Developer contacted me for my property subject to an Option - UK

[Jonathan Simons]

Hi All
A developer contacted me friday via mail, for my property in the UK. It was an unsolicited approach and they included the option agreement with it etc.

I was wondering if anyone knows much about this kind of thing here?

The option agreement felt very loose, and didn't cover everything i feel.

So was wondering about the following as I feel its a good price and was actually looking to maybe move in the future.

1) What is the usual length of term in an agreement for an option to purchase when planning permission is being sought and also what is the shortest reasonable term for this purpose?

2) What are the benefits and pitfalls of options to purchase for the person selling the property?

3) Is it reasonable to ask for a 10% non refundable deposit for an option term?

4) Should all details regarding a sale be agreed before signing an option or is it usual to sort those details out after signing and option agreement?

5) How can I protect myself against someone posing as a potential purchaser, who has no real intention to follow through with it, i.e. how can I ensure that an option agreement won’t simply be used to stop me from dealing with my property for a set period of time?

6) Should you tell a mortgage provider (if you have one),that you have signed an option agreement?

7) Are there any tax obligations with an option?

8) After signing an option agreement, can an intending purchaser whittle away at the agreed price? And if so what can you do about it?

9) Can an intending purchaser transfer or sell the option?

10) If you need to sell within that time frame, can and how do you get out of an option agreement and what would be the repercussions?

11) What if the Developer never once submits a planning.

12) Should "how the developer intends to purchase the property be included" i,e If they then have to take granted planning permission to the bank for money to buy the property.

13) What happens if Planning granted, but they dont actually have the money in their bank, or bank refuses the developer a loan.

I thank everyone in advance

Jon

 

[Longterminvestor]

I am no expert but for what it is worth:-

1) What is the usual length of term in an agreement for an option to purchase when planning permission is being sought and also what is the shortest reasonable term for this purpose?
COMMENT: I dont think there is any set timescale - but protect yourself, dont get locked in so you can do anything with it.

2) What are the benefits and pitfalls of options to purchase for the person selling the property?
COMMENT: You wont be able to do anything until the option period is up

3) Is it reasonable to ask for a 10% non refundable deposit for an option term?
COMMENT: I would ask for more, if they are serious this should not bother them.

4) Should all details regarding a sale be agreed before signing an option or is it usual to sort those details out after signing and option agreement?
COMMENT: Yes - otherwise on what basis is the option being signed?

5) How can I protect myself against someone posing as a potential purchaser, who has no real intention to follow through with it, i.e. how can I ensure that an option agreement won’t simply be used to stop me from dealing with my property for a set period of time?
COMMENT: Try to stack the option in your favour

6) Should you tell a mortgage provider (if you have one),that you have signed an option agreement?
COMMENT: I dont think you need to but maybe best to keep them onside?

7) Are there any tax obligations with an option?
COMMENT: Speak to an accountant about this one, it is potentially all capital gain.

8) After signing an option agreement, can an intending purchaser whittle away at the agreed price? And if so what can you do about it?
COMMENT: Only if you let them.

9) Can an intending purchaser transfer or sell the option?
COMMENT: Not if you bar this in the option agreement.

10) If you need to sell within that time frame, can and how do you get out of an option agreement and what would be the repercussions?
COMMENT: This is down to the terms of the agreement - take legal advice.

11) What if the Developer never once submits a planning.
COMMENT: Time restrict the option.

12) Should "how the developer intends to purchase the property be included" i,e If they then have to take granted planning permission to the bank for money to buy the property.
COMMENT: No, you just want to sell, you arent interested how they do it.

13) What happens if Planning granted, but they dont actually have the money in their bank, or bank refuses the developer a loan.
COMMENT: Until they pay you, the property is yours. If they are granted planning permission - as I understand it - it is on the property not the person. Copy the submitted application and surely you would have the same permission?

 

[diyhelp]

Some very good points made in response.

What I would add is that YOU should be in control YOU should be dictating the terms of any agreement. Dont lock yourself in or sell yourself short.

I would insist on a a non-refundable deposit. If they are serious they wont think twice - if the are messing you about then this will put them off

 

[Longterminvestor]

Totally agree - you need to play the upper hand. Lets not forget that the third party approached you, in their eyes you are not a forced seller. Use that to your advantage!