Conditional & Unconditional Contracts for Property Development
Commonly a conditional contract is for the sale or purchase of a development site is a conditional contract. A conditional contract enables the buyer to agree to buy the property, subject to certain conditions being satisfied e.g. satisfactory planning permission being obtained. Once the conditions have been satisfied within the timescale specified in the contract, the contract becomes unconditional and the buyer must proceed and complete the purchase of the site on the date set out in the contract.
What are the benefits of a Conditional contract for a developer?
A conditional contract allows a developer to secure the land for a certain period of time to enable them to satisfy the conditions of the contract. Therefore, In the event that the conditions cannot be satisfied within the timeframe agreed in the contract, the parties are free to walk away. Plus the developer will not have incurred the expense of purchasing land for which it has not been possible to obtain satisfactory permission.
What are the benefits of a Conditional contract for a landowner?
However, for a landowner a conditional contract allows the landowner to utilise the expertise of the developer in obtaining satisfactory planning permission (and potentially seek to have a say in the permission granted through the terms of the contract, although this is often limited) in exchange for agreeing to sell the land to the developer if the conditions are satisfied. This is limited to a certain period of time – often known as a long stop date – which is agreed upon between the parties.
An Unconditional Contract
An unconditional contract for the sale or purchase of land is the simplest form of contract and means that there are no conditions attached to your contract. The buyer will be agreeing to complete the purchase of the land on the completion date specified in the contract and the sale/purchase will not be dependent on any other factors.
While conditional contracts can provide certainty for both parties, it is often unsuitable for a development site unless the site already benefits from satisfactory planning permission and a developer is happy to proceed with the transaction as is and not relying on any further permissions being obtained.
Although an unconditional contract is the simplest form of contract for the sale or purchase of land, with development there are very often additional terms needed in the contract to deal with any copyright, community infrastructure levy, or environmental issues attached to the site.
Speak to our team today to see if an unconditional contract is right for you.
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