Lockout Agreement: understanding their purpose

A lockout agreement serves as a strategic tool, often employed during the preliminary stages of a transaction, to secure the interests of parties involved. In this blog, we’ll demystify the intricacies of lockout agreements, shedding light on their purpose, key components and implications.

What is a lockout agreement?

A Lockout Agreement is an agreement between a buyer and seller that a future sale will take place. The buyer is granted exclusive rights to buy the property within a certain time frame. The buyer has time to carry out searches, surveys and investigations before committing to the purchase. The seller is prevented from negotiating with other buyers and possibly accepting another offer during the lockout period. However, a Lockout Agreement does not mean both parties have to proceed with the sale in the future. 

What should a lockout agreement include?

• The lockout period – this is the amount of time that the agreement is going to be in place, it is usually a short period of time. 
• Seller’s obligations, these may include:
  • To stop negotiating with third parties that may wish to purchase
  • To stop marketing, the property
  • To issue draft contracts to the buyer and to answer the buyer’s enquiries
• Buyer’s obligations, these may include:
  • To proceed with surveys and searches as quickly as possible
  • To pay an agreed premium for the lockout agreement
  • To purchase during the lockout period, if they choose to do so

How can Taylor Bracewell’s commercial property team assist you?

Our Commercial Property team are experts within their field and are always happy to help. If you think you may benefit from their advice you can contact them by calling our Doncaster team on 01302 341414 or our Sheffield team on 0114 272 1884, alternatively, you can fill out our online enquiry form.