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December 14th, 2020

Option Agreement To Buy Property

The person granting the option is referred to as an “option” or “beneficiary” and the recipient is designated an “option” or “beneficiary.” An option that gives the buyer the right to buy an asset is an appeal option. An option agreement is binding only on the seller – because the option holder may choose not to exercise it. If the owner does not exercise until the last day of exercise, he dies and is dead. It follows that it is very important to use as comprehensive a treaty as possible. If you agree with someone to buy their land, they expect lawyers to produce papers. But if you call one night with an agreement under your arm, he may be scared if he is six pages long and needs a lawyer to explain it. So if you are dealing with a demanding owner, certainly do not take any risks and do it properly with a complete document. But if your other party is probably worried, you might be better off with a simpler document, although this could cause delays or other problems later on. Stamp duty is applied if you purchase an option that is already in the possession of another person. An option gives the holder the right, but not the obligation to buy or sell an asset at a price calculated in advance according to a formula agreed in advance or at a fixed price. Louise Norris, partner in our commercial property team, explains what an option agreement is and why the parties to the purchase of land want an option.

Looking at the mathematics of an option, there are several variables: The first step is a high cost-benefit evaluation. There should be enough profits (after taxes) to pay for your work and encourage the landowner to sell you an option to purchase. After the exchange of contracts, the parties must sign a document that effectively transfers the property. The time between the exchange and the conclusion is usually taken by various requests and checks by the buyer`s lawyer, but these can actually be made earlier. If push comes to push, each ground transaction can be compressed to 24 hours.

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