Legal Question in Real Estate Law in California

Is it possible to for me, as the owner, to establish an option agreement with an individual (non-owner) for that individual to subdivide a certain piece of a parcel within a certain # of years? If yes, then if I sell the main parcel within the option period, is the option agreement binding to the new owner (e.g., the new owner would have to honor the original option agreement), if the option agreement has language that states to the agreement being binding to any assigns and successors? Also, is there a limit on how long the option agreement can last? I would like to provide the individual a continued right to subdivide even after the main property changes ownership. Property is in CA, and the county allows for subdivision of subject property. Thank you!


Asked on 3/21/22, 8:48 pm

1 Answer from Attorneys

You can certainly make an option to subdivide "run with the land." However, only if it carries some right also to acquire some or all of the land once it is subdivided. The option can last for a very long time but not indefinitely. There is a very old rule of law called the Rule Against Perpetuities that sets a limit on how long an unvested contingent interest in real property can exist. If a grant of a contingent right violates the rule, it actually invalidates the grant from the beginning. In this context the maximum recommended period would be the lifetime of the person granted the option. Some specific number of years that are less than an average lifespan would also work. You should also consider the fact that you probably need to grant an easement for access to the land so the survey and related work needed to do a subdivision can be done.

CLOSING WARNING: Options and easements, especially ones that are transferrable are no place for amateur planning and drafting. Get a lawyer involved before you make any agreements with the other person.

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Answered on 3/22/22, 1:59 pm


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