PURCHASE LEASE OPTION SOLICTIORS
A speedy legal service with fixed fees!
Have you found an Investment property. Need a Purchase Lease Option drafting quickly?
Our in-house lawyers are also property investors themselves and really understand the importance of a speedy legal service when arranging a Purchase Lease Option.
What is an Option Agreement?
As a property developer, you may have identified a piece of land or a property where you can add significant value.
This might be done by obtaining a planning gain with a view to developing it afterwards. By entering into an agreement with the owner of the asset, as the developer, you will get the right to buy the asset off the owner, if planning is approved.
These are called “Option Agreements” or “Options” and have been used in the commercial sector for many years. The key point is that you have the right to buy the asset, but not the obligation to do so.
This way of controlling an asset is significant because, if for example planning gain is not achieved, you do not need to purchase it. The only losses will be the cost of the planning process and associated professional fees. Much cheaper than buying the asset and then failing!
If, however, planning is approved, you will have the right to purchase the asset at the price agreed from the outset. This is sometimes called the “strike price”.
Such agreements are also time limited. This means that the asset must be purchased by a certain date. This is often referred to as the “long stop date”.
Following negotiations, the main terms of the agreement will be contained in the Heads of Terms, which are then usually passed onto solicitors to draft the agreements.
What is a Purchase Lease Option?
A Purchase Lease Option is just an Option Agreement but coupled with a lease.
This type of agreement is becoming popular with residential property investors. It means that you can control a property without the need to pay for the deposit or get a mortgage at the outset.
The Option Agreement will give you the right to buy the property at an agreed price & within a certain period of time.
A notification is often registered at the Land Registry against the owner’s title to make sure that the property is not sold without the property investor knowing.
If you are the investor, you will usually pay a monthly fee to the owner during the agreement.
The Lease Part
As an investor, you can enter into a lease or management agreement with the owner. This will typically set out how you will use the property and will clarify the parties responsibilities for things such as maintenance, insurance, mortgage payments etc.
Why Do I Need a Solicitor to Draft a Purchase Lease Option?
These types of agreements have been challenged in court. This could happen for example if the property increases significantly in value such that when you wish to exercise the option the seller no longer wants to sell.
For that reason alone, it is essential that each party to the agreement takes independent legal advice. If so, a court is much less likely to conclude that the seller did not know what they were getting into.
How can we help?
Regardless of whether you need advice on an Option or Purchase Lease Option or need one drafting, we can help you. We also understand the necessity for speed. We usually act on a fixed fee basis.
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