Five clauses that cost landowners the most

Option and promotion agreements are long documents written by people who negotiate them for a living. The headline terms — a discount to market value, a promoter’s percentage — get all the attention. The clauses below get very little, and between them they decide how much of that headline ever reaches you.

1. The cost line

Most agreements let the developer or promoter recover their costs before your share is calculated. The question is which costs, and how many of them. An open-ended list, with no cap, lets planning consultants, appeals, finance and “abnormals” accumulate for years and come straight off the top of your receipt.

Ask for: a defined list of recoverable costs, a cap (or an approval threshold above which they need your consent), and regular reporting of what has been spent.

2. The minimum price

Where the price is set by formula — market value less a discount, or proceeds less costs — there is no guarantee where it lands. Without a floor, a weak market or a cost-heavy scheme can produce a figure you would never have agreed to at the outset, and you are obliged to sell at it.

Ask for: a minimum price per acre or per plot, indexed so it keeps pace over the life of the agreement.

3. The longstop — and what extends it

Every agreement has an end date. The trap is in the extensions. A clause that extends the term automatically while an appeal is “pending”, or while “planning progress” is being made, can keep your land tied up for years beyond the date on the front page, with no renegotiation.

Ask for: tightly defined extension events, a limit on how many can be claimed, and a final longstop that cannot be moved.

4. What the other side must actually do

“Reasonable endeavours” sounds like an obligation. In practice, it can require very little. If the site goes quiet, it is often the only lever you have — and a soft one gives you nothing to pull.

Ask for: hard dates: a deadline to submit the planning application, a deadline to decide whether to appeal, and a deadline to exercise the option or complete the sale once permission is granted. Tie the right to terminate to those dates being missed.

5. What counts as a planning permission

Completion is usually triggered by a “satisfactory” planning permission. Defined too loosely, and a buyer can walk away from a perfectly good consent by calling it unsatisfactory. Defined too tightly, and you can be forced to accept one that will never be built. Outline or full, the number of homes, and the conditions and Section 106 obligations it can carry all belong in the definition.

Ask for: a definition that matches the scheme you are actually agreeing to, with objective thresholds rather than the buyer’s discretion.

Two more worth reading twice

Overage security. If you sell with an overage — a share of future uplift — it is only as good as the security behind it. Without a restriction on the title or a legal charge, it can be very hard to enforce once the land has been sold on.

The marketing duty in a promotion agreement. The case for promotion is that the land is sold in open competition. A vague duty to achieve the “best price” leaves room for a quiet, off-market deal. Ask for a defined marketing process, a minimum number of bidders where the market allows, and your approval of the chosen buyer.

Before you sign

1. Read the definitions section before anything else. Most of the clauses above are decided there.
2. Run the price formula with realistic numbers, including costs, and see where it actually lands.
3. Map out the longest the agreement could run with every extension claimed.
4. Take tax advice alongside the property advice. The structure can change the net outcome substantially.

General information, not advice. Every site is different, and a proper answer needs a look at yours.