Option agreements are a common way for developers to secure development sites because they offer flexibility and also help manage cash flow and accountability. As you know, complex and aging agreements require expert work to ensure that there are no nasty surprises along the way. And surprises can indeed be extremely nasty. For example, in the Ministry of Defence v County and Metropolitan Homes (Rissington) Ltd. the parties did not consider the possibility that the developer would not demolish the 37 houses on the property concerned. Since they destroyed only 35 and turned two properties into a single company, the developer had to pay a total of almost a million pounds in excess. From a legal point of view, an option to acquire a property is not registered as a mortgage on the land registry. However, it can be registered as an “indication,” which is visible to anyone conducting a land registry search on the title of your property. The communication informs third parties that there is an option for real estate. In addition to the examples in the opening paragraph, there are other situations that can lead to an option agreement: unlike pre-purchase agreements that give the potential buyer only a right to pre-purchase when the seller chooses to sell it, an option contract is a legally binding contract. So don`t be surprised that you (or the buyer, if you are the seller) are able to successfully conclude the event on which the option depends, you will actually have to buy or sell the property, even if other circumstances have changed. The key to avoid “Oh no, what I did!” It is important to ensure that the development of the option agreement is as watertight as a submarine. The duration of the option – The amount of the option – The condition or conditions that must be met for the right of option to be fulfilled – Amount of down payment and payment terms – Extension of the term of the option, if applicable – The final purchase price of the property, if any – Dispute resolution procedure – Details regarding the termination of the deadline for each agreement under certain conditions Hello , could you tell me if this type of agreement could also work in combination with a long lease of a commercial property? in other words, effectively allow a “lease-purchase” agreement? What is the effect of the agreement on credit quality if the seller enters the option agreement (compared to a house)? How would this affect their ability to buy another property? Lenders would consider the seller to already have a mortgage (and what type (buy-to-let or normal)? After the exchange of contracts, the parties must sign a document that effectively transfers the property.