A conditional contract is an agreement or contract conditional upon a specific event, the occurrence of which, at the date of the agreement, is uncertain. A common example is a contract conditional upon the buyer getting planning permission.
This simple explanation belies the complexity of the drafting involved in the preparation of such agreements which often relate to very valuable land or buildings. Poorly drawn documents can result in substantial loss.

An option is the right to require a party to buy a property (a ‘Put’ option) or the right to require a party to sell a property at a given time in the future (a ‘Call’ option). An option agreement will involve an option period where the party with the benefit of an option can call on the other party to either sell them the property or to buy the property from them at a price and on a given date. If that right is not exercised within the option period then the option lapses and both sides are back to the position they were in before the option was entered into.

Once granted an option is usually registered at the Land Registry against the relevant title to put any interested party on notice that there is an option in place. A bank which has a mortgage over a property needs to be put on notice of the option otherwise they can sell free of it if it post dates the charge.

For advice on conditional contracts and options please contact:

Glyn Evans on 01934 637911 e-mail evans@powellslaw.com or
Stephen Soper on 01934 637915 e-mail soper@powellslaw.com.

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