We are going to be publishing some key points for developers to consider when entering into option agreements, starting with rights of entry.
In our experience, developers often need access to the site before exercise of their option, for example to undertake soil surveys and tree works. If the option agreement is silent then the developer will have no right to enter the site at all without the owner’s consent – and the owner will be under no obligation to give that consent. Developers should therefore consider the following:
- Think about what surveys and investigations you need to carry out; do you want everything listed in the agreement, or do you want to be more vague?
- If you are buying a house with a garden and are planning on selling off the house and keeping the garden, will you need access for viewings of the house to potential buyers/agents?
- Will you need access to just the grounds of the property, or will you need to enter any buildings? Some landowners won’t want you to enter to their home.
- Are your surveys going to be intrusive? Some landowners won’t like you digging up their back gardens for boreholes etc. If you are offering to make good, how long after your have completed your surveys will you do so? To what standard will you be making good? What if you can’t make good - will you offer compensation instead?
- When will you need access? Will it just be Monday to Friday business hours, or will you need access at the weekend?
- How much notice are you prepared to give the landowner to go onto their land to carry out surveys etc.? How will you give this notice? Phone, email or letter?
- Will you agree to comply with any regulations imposed the owner governing access to their property?
- Will you let the owner be present?
- Will you provide the owner with any test results?
- Is the property owner-occupied, or are there tenants whose consent you will need? How will the landowner get the tenants’ consent if they haven’t got sufficient rights to do this in their letting agreement?
- Is it just you undertaking the surveys, or will it be contractors who also need rights of access?
- Will you agree that you (your contractors) will have insurance to carry out the works? If so, what insurance cover are you prepared to offer and what limit of indemnity will the insurance have?
- If you are buying garden land, can you access the land direct from the highway, or do you need the right to access the land you are buying via the owner’s retained land?
- Do you need the right to carry out any tree works? If so, do you know if any TPOs affect the trees? Will you agree to replace any trees removed? If so, with what? Will it be the same species, what age of tree, what height of tree? Can you only agree to plant replacement trees at certain times of year?
As you can see even a fairly simple agreement at the heads of terms stage can require lots of negotiation. Careful consideration needs to be given therefore as to what you require and also what a landowner is prepared to permit you to do.
For more information, please contact Isabel Alderton-Sell.