Option Or Promotion Agreement

The value of the land is determined at the time of signing the option contract, that is, before the increase in value that generally follows the granting of the building permit, the developer raising the highest possible selling price on the open market. A promotion agreement generally exploits the assets of the promoter, who uses his skills and often local knowledge to promote the country and its development within the framework of local development. The only certainty in bringing a more appropriate agreement closer is the need for clear and informed consultation. The best agreement will always be well drafted and will reflect exactly what the parties have agreed. What`s the best part? The decision will be made on the desire of the landowner to participate in the assistance process and on the relationship between the developer and the landowner. An expert lawyer will be able to guide the landowner in this decision and, crucially, ensure that the formal agreement with the developer reflects exactly what the parties have agreed. Good preparation will contribute to the success of the development project and avoid wasting profits in the event of costly litigation. It is often argued that the interests of the landowner are best served by a transportation agreement and that it is the developer who benefits most from an option agreement. But the lines are very blurry these days and the best deal for all parties is usually achieved through negotiation to split the rewards. Here at Newmanor Law, we have experienced real estate lawyers you need to talk to before you create, so if you have land for sale or if you would like to develop a website, please contact Karen Mason on (0)20 7464 4081 or by email karen.mason@newmanor.com Whatever agreement you choose, an owner should seek advice and careful consideration of the tax position.

If a promotion contract is chosen, there are two immediate concerns. First, that the developer is required to collect VAT on all payments it receives (i.e., reimbursement of its transportation and development costs and its percentage share of the proceeds of the resulting net sale); second, landowners and developers run the risk of being treated in partnership and taxed as such.