This is an odd question in that choices both A and E can be correct, while of course other things can be easily dumped for obvious reasons.

A. that government officials agree to have the area razed. …. Perfect fit of subjunctive mood; can be a choice.

B. that government officials agree for to have the area razed.=== agree for is wrong idiom
C. the agreeing by government officials to have the area razed. ----requiring the agreeing? Awkward
D. government officials agreeing to have the area razed. ---- Government officials agreeing? awkward
E. government officials to agree to have the area razed. … Uses simple idiom requires X to Y where X is the object and Y the subjunctive verb, exposing the intended meaning precisely ; another good choice.

I wonder whether a topic with two potential choices as correct ones will ever appear in a GMAT. But as per the norm that between equal choices, better stick to the original, A will be more prudent to choose than E. But E is more crisp and clear. It is any body’s guess now.
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@daagh, i marked E . is the usage of 'that' in A correct ?

why not? That is an essential feature of the subjunctive. If you do not use 'that', then you have to choose the infinitive as in E
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@daagh
'that' is an essential feature of the subjunctive ?

1.Donna requested Frank come to the party.

2.It is important she attend the meeting.

are the sentences correct grammatically ?

1. "That" is necessary when the "be" form of the verb has to be used.

The court ordered that the prisoner be released. Now consider a sentence without "that":

The court ordered the prisoner to be released.

In the first sentence, it is clear that the court's order is meant for the authorities who have imprisoned the prisoner. In the second, it may seem that the court is ordering the prisoner himslef (who is to be released)

2. It is possible not to use the command subjunctive, instead, command verb+Noun+infinitive can be used:

"The court ordered the warden to release the prisoner"

In the question, A & E follow the first and second pattern respectively and hence I can't decide which one to go for
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This is indeed a very good question. A and E are quite close.

Though I m always inclined towards A for such close answers. But in this question, A has some problems.

X require that Y + be verb - correct
X require Y + infinitive - correct. -> This is basically the form used in E.

But the former form is not used in A. why?

if the sentence had been " X requiring that Y agree on this contract" , the answer would have been correct.

X requiring that government officials agree <to have the area razed> -> this is unidiomatic.
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Garimavyas wote

@daagh
'that' is an essential feature of the subjunctive ?

1.Donna requested Frank come to the party.

2.It is important she attend the meeting.

are the sentences correct grammatically ?

Yes these are the two examples that the englishpage.com(http://www.englishpage.com/minitutorial ... ctive.html) describes as examples of subjunctive without the connector “That” But at the same, you might have noted that all the other examples have the essential word ‘that’ The two are exceptions to a rule and one can not pass off them as rules themselves. IMO it is not fair to corrupt a rule by its exceptions
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Sir please let me know when to use "that" and when to use "to".

Also, are both the forms are subjunctive.

Can you please explain a bit more about this "to" form.

Is it necessary that in "to" form, i.e require X (object) to Y (Subjunctive)??

Thanks in advance.