Development and Option Agreement


Development and option agreement is a legal document that outlines the terms and conditions for a developer to purchase a land parcel with the intent of building a property. This agreement is essential for both the property owner and the developer as it sets out the obligations and responsibilities of each party. In this article, we will discuss the key features of a development and option agreement.

Key Features of a Development and Option Agreement

1. Option Period

The option period defines the duration within which the developer has the right to purchase the land. The developer pays a non-refundable fee to the owner to secure this option. This fee is usually a small percentage of the total purchase price of the land. The option period is typically six months to a year, but the duration can vary depending on the agreement between the two parties.

2. Purchase Price

The purchase price is the amount the developer will pay to purchase the land. This amount is not fixed, and typically, the purchase price is contingent on the development`s success. In such cases, the purchase price will be a percentage of the development`s gross sales or net profits. If the developer decides not to proceed with the development, they will not be required to purchase the land.

3. Development Requirements

The development requirements set out the scope of the development. This may include the number of buildings, their size, design, and materials used in construction. The agreement may also cover zoning and other land-use regulations that the developer needs to adhere to.

4. Obligations

Development and option agreements outline the obligations of each party. The property owner is obligated to give the developer access to the land during the option period. The developer is required to cover all the expenses associated with due diligence, including surveys, environmental assessments, and other related investigations.

5. Dispute Resolution

The dispute resolution clause outlines the procedure the two parties will follow in case of a dispute. This may involve mediation or arbitration. The dispute resolution process can be time-consuming and expensive, so it is essential to have a clear understanding of the dispute resolution mechanisms from the outset.


In conclusion, development and option agreements are essential legal documents that protect the interests of both property owners and developers. These agreements outline the terms and conditions that both parties must comply with in the development process. A well-drafted development and option agreement can save all parties involved the time and expense of litigation and ensure a smooth development process.