Many development transactions are effected by way of an option, conditional contract or promotion agreement. The nature of each of these documents is briefly explained below.
A call option is the most common type of option. It grants to the developer the option to require the landowner to sell a property to it. The option may be exercisable at any time during the option period or only on the occurrence of certain events such as the obtaining of planning permission. It is the developer who decides whether to exercise the option.
A conditional contract is a contract for the sale and purchase of land which is subject to satisfaction of a condition precedent. Often the condition precedent is the obtaining of a satisfactory planning consent, although other conditions can and often are included. Careful consideration needs to given to the drafting of the definition of a condition precedent so that it is clear when it has been satisfied as, once it is, the contract is unconditional and completion of the sale is triggered.
A promotion agreement is used where a developer or promoter agrees to apply for planning permission for a development on a landowner's property and, once planning is obtained, to market the property for sale on the open market. The promoter funds the planning and marketing costs initially and often pays a promotion fee to the landowner.After planning permission is obtained and the property is sold, the promoter's costs are reimbursed to the promoter out of the sale proceeds and the promoter receives a proportion of the sale proceeds.
Our expert team are experienced in acting for both land owners and developer in relation to such documentation. We therefore understand the deal from both perspectives and are able to recommend creative solutions to difficult issues. This aids our timely negotiation of the complex documentation involved in such transactions.