Option Agreements, Rights of Pre-Emption and Overage Payments

Many commercial property transactions include terms which make provision for future events.

We have experience of many different types of arrangement including option agreements, whereby parties enter into an agreement where one party has the option to purchase until a specified date in the future. Similarly, we deal with rights of pre-emption whereby parties enter into an agreement that if the seller decides to sell the land the other party will have the right to purchase, over and above any other interested parties.

For developers and companies these agreements allow for future expansion and development without an outright commitment or large payment up front. They quite literally provide an option for the future.

Similarly for sellers it can often be desirable to include an overage clause in a contract to ensure that if a future event occurs, such as development of greenfield land, the seller can claw-back some of that additional money.

However, as businesses make decisions based on the existence of these agreements it is essential that such options and rights are correctly drawn up and binding. This is an area where knowledge and experience are crucial.

As these agreements can run for many years we ensure that our clients are fully aware of the implications, pointing out the pros and cons of such arrangements.

If you have any queries relating to this kind of agreement then please do not hesitate to contact our team and we can offer individual advice tailored to your particular requirements.