PUT & CALL OPTIONS: A POWERFUL TOOL IN PROPERTY DEALS BY SUE STEEL When it comes to buying or selling property, most people are familiar with the standard process: you find a buyer or seller, sign a contract, and proceed to settlement. But in the world of development, investment, and commercial property transactions, things can get a little. more sophisticated. One tool that is becoming increasingly common in higher-level deals is a Put and Call Option Agreement. At its core, a Put and Call Option is a legal agreement that gives two parties the right, but not the obligation, to compel the other to either sell or buy a property within a set timeframe. It delays the final sale while locking in terms and providing flexibility to both parties. Here's how it works. The Call Option gives the buyer the right to require the seller to complete the sale, usually within an agreed period. If the buyer exercises their Call Option, the seller is legally bound to proceed. On the other hand, the Put Option gives the seller the right to require the buyer to complete the purchase, even if the buyer has not exercised the Call Option. This creates a structure that gives both sides protection and certainty. Option Agreements often include both elements (the Call and the Put), but they do not have to. A buyer may want only a Call Option to secure the right to purchase later, giving them time to conduct due diligence or arrange finance without being locked in too early. A seller, on the other hand, might prefer only a Put Option, which allows them to compel the buyer to proceed with the purchase within a certain timeframe. This can provide comfort to sellers who want to ensure the buyer does not walk away after extended negotiations or due diligence. STACKS SUE STEEL Each option can be used individually depending on the commercial needs of the parties involved. So why use an Option Agreement instead of a regular contract? The answer is strategy. Buyers may need time to secure approvals, refinance, or on-sell to a third party. Sellers may want to preserve confidentiality, or lock in a future sale price. These agreements also provide a mechanism for longer settlements without triggering a contract for sale too early. However, these agreements are not without risks. They are binding legal instruments that can have serious financial consequences if misused. The timing of notices, payment of option fees, and conversion into a contract must all be carefully managed. An error or delay could result in a dispute, forfeited money, or even litigation. It is also worth noting that Put and Call Option structures will trigger stamp duty on any call option fee. Further, it may trigger stamp duty on the purchase price earlier than the agreed settlement date. The NSW Office of State Revenue scrutinises these arrangements closely, and early legal advice is critical. Put and Call Options can be highly effective when used correctly, but they are not suitable for everyday buyers or sellers. These are commercial tools best suited to parties who understand the timing, risk, and financial implications involved. At Stacks Law Firm Tamworth, we regularly assist clients with structuring, negotiating, and executing Put and Call Option Agreements. Whether you are a developer, investor, or landowner considering a more strategic approach to a sale or purchase, understanding how these agreements work, and where the traps lie, is essential. 02 6767 2000 If you are thinking about entering into a deal involving an Option Agreement, speak with us before you sign anything. It may be the smartest call you make. 1 Fitzroy Street Tamworth stacklaw.com.au STACKS LAW FIRM AW7447234 PUT & CALL OPTIONS : A POWERFUL TOOL IN PROPERTY DEALS BY SUE STEEL When it comes to buying or selling property , most people are familiar with the standard process : you find a buyer or seller , sign a contract , and proceed to settlement . But in the world of development , investment , and commercial property transactions , things can get a little . more sophisticated . One tool that is becoming increasingly common in higher - level deals is a Put and Call Option Agreement . At its core , a Put and Call Option is a legal agreement that gives two parties the right , but not the obligation , to compel the other to either sell or buy a property within a set timeframe . It delays the final sale while locking in terms and providing flexibility to both parties . Here's how it works . The Call Option gives the buyer the right to require the seller to complete the sale , usually within an agreed period . If the buyer exercises their Call Option , the seller is legally bound to proceed . On the other hand , the Put Option gives the seller the right to require the buyer to complete the purchase , even if the buyer has not exercised the Call Option . This creates a structure that gives both sides protection and certainty . Option Agreements often include both elements ( the Call and the Put ) , but they do not have to . A buyer may want only a Call Option to secure the right to purchase later , giving them time to conduct due diligence or arrange finance without being locked in too early . A seller , on the other hand , might prefer only a Put Option , which allows them to compel the buyer to proceed with the purchase within a certain timeframe . This can provide comfort to sellers who want to ensure the buyer does not walk away after extended negotiations or due diligence . STACKS SUE STEEL Each option can be used individually depending on the commercial needs of the parties involved . So why use an Option Agreement instead of a regular contract ? The answer is strategy . Buyers may need time to secure approvals , refinance , or on - sell to a third party . Sellers may want to preserve confidentiality , or lock in a future sale price . These agreements also provide a mechanism for longer settlements without triggering a contract for sale too early . However , these agreements are not without risks . They are binding legal instruments that can have serious financial consequences if misused . The timing of notices , payment of option fees , and conversion into a contract must all be carefully managed . An error or delay could result in a dispute , forfeited money , or even litigation . It is also worth noting that Put and Call Option structures will trigger stamp duty on any call option fee . Further , it may trigger stamp duty on the purchase price earlier than the agreed settlement date . The NSW Office of State Revenue scrutinises these arrangements closely , and early legal advice is critical . Put and Call Options can be highly effective when used correctly , but they are not suitable for everyday buyers or sellers . These are commercial tools best suited to parties who understand the timing , risk , and financial implications involved . At Stacks Law Firm Tamworth , we regularly assist clients with structuring , negotiating , and executing Put and Call Option Agreements . Whether you are a developer , investor , or landowner considering a more strategic approach to a sale or purchase , understanding how these agreements work , and where the traps lie , is essential . 02 6767 2000 If you are thinking about entering into a deal involving an Option Agreement , speak with us before you sign anything . It may be the smartest call you make . 1 Fitzroy Street Tamworth stacklaw.com.au STACKS LAW FIRM AW7447234