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Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
May I clarify if you have yet granted the developer and option on your land please?
Yes. They have issued a valuation notice having received our planning permission. This is the start of exercising their option. But their valuation notice looks invalid to us because it is conditional. It seems clear that any valuation has to be unconditional or it simply is not stating the value. the 'condition' has to be taken into account when stating an actual value
Thanks for the above. For the avoidance of doubt have you previously entered into a formal option agreement with them? If so how long is their option period?
Yes it is a formal option agreement it was 30 calender months and interestingly it has expired! The developer will not address the issue of it expiring because we believe they have no answer to that but they do insist that their valuation notice is valid but we believe the conditionality renders it invalid.
Thanks. Do you wish to allow them to purchase still or not? Is there any provision for extension of the option - sometimes there is a provision for extension in narrow circumstances in such agreements though exercise of the extension normally requires a notice from one party or the other?
They can still purchase but outside of the old option agreement. There were 4 specific provisions for extension but non of them applied at the time of expiration. We believe they want us to negotiate their invalid valuation notice so they can say we are negotiating and so 'de facto' the agreement still lives on! We want opinion on how the conditionality of the valuation notice renders it invalid in the first place. I have to leave and will be back at the computer around 5.00pm
Thanks. If the original option agreement has expired and there is no basis for extension then there is no obligation to sell to them. if you are still considering sale to them you will wish to presumably divorce yourself from the original option agreement. Accordingly a response to them that their option agreement has expired and has not been extended and accordingly they no longer have an option to purchase your land. However you can go on to say that you will however entertain offers from them as private offers to treat for the land and will consider such offers in conjunction with agents and valuers advice.
You can go on to say that any such offers would be subject to contract. If you negotiate in the context of an option, you are correct that there is a potential basis for the developer to claim that you accept that the option is still subsisting and it is important to make it clear that the option has expired as above.
You may wish to consider contacting a valuer to ascertain whether you can achieve a higher price than any offered by the developer and you may wish to consdier a period of marketing on the open market before making a decision.
is there anything above I can clarify for you?
Does the above answer all your questions or is there anything I can clarify or help with any further?
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Yes there is. My question was and is:- Is a valuation notice that is conditional still a valid valuation notice. We believe it is not because a valuation is not a valuation if it is conditional. Also the whole point of a valuation notice in an option is that the seller can bind the buyer to their valuation but if it is conditional obviously they cannot. Do you concur? the reason we need to know this is that one of the conditions of the agreement living beyond its expiry dat is that they have issued a valid valuation notice before the expiry date
I think if I may the question is academic and in addition the answer to the question would to some extent depend upon what the option agreement provided for - i.e. what it provides the developer has to do to exercise his option. However since the option agreement has now expired none of the above is of any relevance as you will presumably wish to start negotiating free of the option agreement by private treaty - i.e. just as you would with any other third party.
Unless you wish to potentially still be bound by the option agreement, and I cannot see any obvious reason you would want to be as it potentially restricts your freedom to negotiate, it is important that you make it clear as above that that the option has expired and you cannot enter into any further negotiations in respect of the same. However you can go on to say that you will consider offers for the land from them and any other buyers that may wish to submit the same
Given that the option has expired a conditional valuation is somewhat meaningless as it has no framework on which to rest. They can submit an offer to purchase or a conditional offer which you are free to reject or accept subject to contract.
I think we are at cross purposes. The option has expired if their valuation notice was invalid. If their valuation notice was valid then the option still exists. Their valuation notice is conditional. We believe a valuation has to be unconditional or it is obviously not a true value. In an option agreement it is essential that the seller can hold the buyer to his valuation and if it is conditional obviously they cannot be held to the price stated. Do you agree? Do you agree that a valuation notice has to be unconditional to be valid? That is the question being asked.
We are in deed at cross purposes on this point. I had understood that their valuation notice was served late in any event from what you say above. Thank you for the clarification.
I would need to have sight of the option agreement to give an opinion on the above I am afraid as each option agreement turns on its own provisions. However they are bound by the terms of the option agreement which should if properly drafted be categoric in what they need to do in order to exercise the option. most option agreements would agree the price prior to the granting of the option and then provide that a notice is served in order to exercise the option at the price agreed. However if they have failed to comply precisely with the provisions of the agreement their option will not be exercised.
The question we want to know the answer to is:- Can a valuation notice be valid if it says 'this is the value but it might not be'?
We are asking a fundamental question that would apply to any valuation notice. We believe a valuation notice is first of all a valuation and surly by definition you are not providing a valuation if you say "it is worth this many £s but we have doubts". Is there precedent for this sort of fundamental requirement for a valuation (or a valuation notice) to be unconditional in order to be an actual valuation. Is this a clearer way of asking this question?
I appreciate the question you are asking but I regret I cannot answer the same without sight of the option agreement. Most option agreements do not rely on a valuation provision so there is no "usual" position here. The whole point of an option agreement is that you agree a price at the outset. You do not try to agree a price later on when the option is exercised. Standard option precedents will provide for a fixed price for the property or per acre and then it is up to the developer to either exercise that option or not. It is possible to agree a valuation based on a set of criteria but unless those criterion are incredibly tightly drafted you as a seller don't really know what you are granting an option for in terms of price. I can do no better than guess as to whether the notice they have served is valid or not without sight of the option agreement. I would suggest in the circumstances that you would need to take the agreement to a solcitor who can read it and give you an opinion as I have really gone as far as I can based on the available information and though it is not in any way your fault, this question ceased to be economic for me some considerable while ago I fear.
I am sorry I cannot give you an answer you seek but unfortunately the question you ask is not possible to answer without sight of the option agreement.
This is very unsatisfactory. We have asked a fundamental question that does not rely on the details of any specific case or contract which is:- Can a valuation (or a valuation notice) be valid if it is conditional. For instance would a valuation be acceptable legally as a valuation if it said "This is the value (£xxxx) but it might not be". Where this can be specific is if you can provide a precedent establishing that a valuation has to be unconditional in order to be valuation. I have to request a second opinion at no extra charge as recommended in your advice section.
I am sorry you feel that it is unsatisfactory but unfortunately I can only repeat that your question is not possible to answer given the information supplied.
Can I get the second opinion at no extra charge as recommended in you r advice section?
It seems very wrong that you cannot advise what constitutes a true valuation. Please cancel my £22 payment