Ross Leatham, a Partner in our Commercial Property Department explains what an option agreement is and why the parties involved in a land purchase transaction may want one.
An option agreement is an agreement between a landowner and a potential developer of the landowner’s property. Mostly the prospective purchaser will pay an agreed price to the landowner and in exchange secures a first option to purchase the property within a certain period of time or as a result of a trigger event for example planning permission being granted for the development.
The option agreement provides the developer with some level of protection as it prevents the landowner from selling the property to someone else whilst the potential purchaser is exploring the feasibility of the project thus reducing risk and cost to the developer. Also the purchaser may be able to agree the purchase price from the very outset bringing some certainty regarding costs.
From the seller’s point of view with the property market having its ups and downs over the past number of years an option agreement is a start to a probable deal being done although it does not guarantee a sale and if the developer does not obtain planning permission and pulls out the purchase would not go ahead.
Often something called an overage agreement is negotiated alongside the option agreement. Land will have a greater market value once it has been built upon and an overage agreement will mean the seller would be able to obtain additional payment after completion of the development based on the increase of value of the land.
Option agreements and overage agreements can be beneficial to both the seller and purchaser but there are of course potential pitfalls.
Should you require advice please do not hesitate to contact me by email email@example.com or by phoning 0141 552 3422
The private rental sector will face significant changes over the next year with the introduction of the new ‘Private Residential Tenancy’ and the ‘Letting Agent’ Regulations but there are a number of other recent legal developments that landlords should be aware of.
- Creation of the First-tier Tribunal Housing and Property Chamber
The Housing and Property Chamber which replaces the Private Rented Housing Panel (PRHP) and Homeowner Housing Panel (HHP) will, from December 2016, issue decisions on rent and repair issues and help landlords with exercising their right of entry. Also from December 2017 the Housing and Property Chamber will also hear private rented housing cases including eviction actions currently heard in the Sheriff Court. Landlords should note that the AT5 and AT6 forms and Tenant Information Packs have been updated to reflect the transfer of functions to the First-tier Tribunal.
- The Letting Agent Code of Practice ( Scotland) Regulations 2016 will be coming into force on 31 January 2018
When introduced, all letting agents must comply with the Code which introduces, amongst other duties, obligations on agents to have insurance, complaints procedures and client money handling processes in place by the date of enforcement. The introduction of the Code of Practice is the first step in a wider framework of letting agent regulation which will include compulsory letting agent registration and as of September 2018 it will be an offence for letting agents to operate without being registered.
- Immigration ‘Right to Rent’ checks to be introduced in Scotland?
The UK government has voiced an intention to introduce the ‘Right to Rent’ scheme to Scotland, the scheme already being in force in England. The scheme was introduced by the Immigration Act 2014 and places a duty on landlords to check the immigration status of would be tenants to make sure they have the right to rent residential premises in the UK. Landlords must refuse tenancies to those who cannot produce the relevant identity documentation. If a landlord breaches this duty under the scheme he/she may face up to five years’ imprisonment or a fine of up to £3000.
If you would like further advice on any landlord and tenant matters then please contact Alison Gourley by email on firstname.lastname@example.org or by telephoning 0141 552 3422
When you “make a bold statement”, you express an opinion in a brave way or it might be “bold” because the opinion is uncommon or controversial.
In the wake of International Women’s Day I am going to be bold.
- There exists a gender pay gap (GPG) which the World Economic Forum predicts will not be closed until 2186. The gap currently stands at 18.1% being the difference between the average pay of men and of women. Although 2017 heralds the arrival of the GPG Reporting Regulations which require employers with 250 or more employees to publish information relating to the average pay of women and men thereby disclosing their GPG ,no sanctions for non-compliance have been imposed nor is there any requirement on employers to take positive steps to close the gap.
- Last year the House of Commons Women and Equalities Committee requested urgent action to give pregnant women and new mothers more protection. The Committee reported that over the past decade the number of expectant and new mothers forced to leave their job has doubled to 54,000 a year. The representatives called for a law similar to the one in Germany which prevents pregnant employees being made redundant except in extremely rare cases. They also called for the three month employment tribunal time limit for pregnancy and maternity claims to be doubled to six months.
- Recent research from the TUC found that more than half of women say they have experienced sexual harassment at work, including unwelcome jokes and comments of a sexual nature about their body or clothes. The accusations of mistreating women made against Donald Trump sparked outrage and served as a timely reminder that harassment and sexism in the work place should not be tolerated.
International Women’s Day made an appeal for women to be bold- bold for change and bold enough to speak up.
From April 2017 a new IHT- free allowance has being introduced. It is to be known as the residence nil rate band (RNRB) and will apply if you leave your residence to your “direct descendants”.
The objective of the policy according to the Government is to “reduce the burden of IHT for most families by making it easier to pass on the family home to direct descendants without a tax charge.”
For some years now the nil rate band has been fixed at £325,000 and it looks like it will remain set at this amount for the next few years. At the moment IHT is charged at 40% on the value of a deceased person’s estate which exceeds the nil rate band. Where spouses or civil partners leave their estates to each other the nil rate band can be transferred giving a maximum of £650,000 IHT free.The RNRB when introduced can also be transferred between spouses and civil partners.
If you would like more information or to find out whether you should consider revising your Will to benefit from this new allowance, please contact me Heather Warnock at email@example.com or by telephoning 0141 552 3422.