How an option works
The developer pays the landowner an option fee. In return, the landowner agrees not to sell or lease the land to anyone else during the option period. If the project moves ahead, the developer exercises the option. If not, the option ends and the landowner keeps the fee.
Key terms to look at
- The length of the option period and any extensions.
- The option fee and the purchase price or rent.
- Access to the land for surveys and studies.
- Which acres are covered.
- Whether a notice of the option is recorded in the county records.
ROFO and ROFR
Two related rights are weaker than an option. A right of first offer (ROFO) lets the holder make the first offer before the owner markets the land. A right of first refusal (ROFR) lets the holder match an offer the owner receives from someone else. Neither one fixes the price in advance.
Questions people ask
Does an option count as site control?
In many interconnection processes a signed option counts. The Texas rule adopted under SB 6 accepts a signed option to purchase or lease. Check the rule that applies to you.
Should I use a lawyer for an option agreement?
Yes. An option is a binding contract over land. This page is a plain summary, not legal advice.
Related
More glossary
- What is time to power?
- What is powered land?
- What is a powered shell?
- What is large load interconnection?
- What is a point of interconnection?
- What is an interconnection queue?
- What is queue position?
- What is ERCOT?
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