Should a purchaser sign an ’option agreement’ to secure a house on a new development?
Forms of Agreement: Developers frequently require prospective purchasers to enter into agreements to ’secure’ newly constructed houses or flats which they have just constructed as part of a new development. The form of agreements produced by developers’ lawyers vary enormously. Sometimes the agreement required is a straightforward preliminary agreement. Often the agreement takes the form of an option to reserve a specified new unit on the development with an initial ’option fee’ of 1% (which is sometimes stated to be non-refundable) being paid immediately, with a balance of 9% being paid within a set period of time after the conveyancing package has been delivered to the purchaser’s legal adviser. Take Legal Advice First: Whilst it is fair and reasonable for the developer to seek a commitment from a prospective purchaser the basic rule stated above still applies and that is that even a 1% deposit should be paid through the offices of the purchaser’s lawyer, after the purchaser has had
