In this recent case, the Court of Appeal ruled that a Developer was not entitled to acquire 117 acres of land at the discounted value provided by its Option Agreement, because it had only obtained planning permission for the construction of a new roof to an agricultural building, not what the Court said was implied by the Option Agreement, i.e. planning permission for the whole or substantially the whole of the 117 acres.
The case arose because the Option Agreement defined the ‘Planning Permission’ that the Developer had to obtain as simply ‘development of the Property’. Technically, construction of a new roof is ‘development’ but the Court of Appeal applied commercial common sense and implied that the Option Agreement provision must have meant much more than this.
Important issues to take into account when completing an Option Agreement
The case of Fishbourne Developments Ltd v Stephens highlights the need to cover all issues when completing an Option Agreement, for example, and in particular:
- Exactly what “Planning Permission” the Developer acquire to trigger;
- Whether the Option can be exercised in part(s);
- If so, can the Landowner require the Developer to acquire the balance?
- Whether rights to access and develop any retained land should be included;
- Is there a minimum price?
- Are there any ‘overage’ provisions, so that if a better permission is obtained later, the Landowner shares in the uplift in value?
And many more.
How can Nelsons help?
If you have any questions about the terms of an Option Agreement, please contact either Martin Jinks (Partner, Solicitor & Notary Public) or Amy Rowson-Hallam (Associate & Solicitor) in our expert Commercial Property team on 0800 024 1976 or via our online form.