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Put and Call Options
REAL ESTATE BREAKFAST BRIEFING
Legal stuff - disclaimer
All material contained in this
presentation is delivered by way
of general comment.
No material should be accepted
as authoritative advice and
anyone wishing to act upon
material contained in this
presentation should first contact
Redchip for properly considered
professional advice, which takes
into account specific situations.
What are put and call options?
Call Option
Future right to
compel a seller to
sell land
Put Option
Future right to
compel a buyer to
buy land
Call option benefits to buyer
• Gives buyer the opportunity to:
• Undertake due diligence on land
• Lodge/amend a DA
• Obtain approvals to develop the land
• Secure finance for the acquisition
• Source partners pre a ‘fund’ being structured
• Gives rise to a caveatable interest in the
land in favour of the buyer
• The price must be agreed before the call
option deed is entered into and will not
change, regardless of market fluctuations
Slide 4
Put options benefits to seller
• Secure buyer
• Secure a price
• Potentially obtain an upfront
release of funds for the grant of
the put option
Slide 5
How are they documented?
Slide 6
A separate agreement that sits on top of the contract
Slide 8
Option Notice
How are they documented?
• Terminology:
• Grantor = Seller
• Grantee = Buyer
• Complete and valid contract for
sale/purchase as annexure
• All aspects of transactions agreed prior to option
deed
• Typically a binding arrangement from
signing (subject to the buyer/seller utilising
their rights)
Slide 9
Features
• Option fee
• Nominal amount
• Larger amount in return for the
grant of the right to put/call
• Option exercise period
• Assignment/Nomination
• Potential for uplift in purchase
price as a buyer to a third party
• Allows for an entity/fund to be
determined post signing the
option
Slide 10
Stamp duty
• Payable by buyer when option exercised (as per
usual conveyance)
• Implications arise when assigning option or
appointing nominee
• Advice should be considered
Slide 11
Questions?
RHENNENF@REDCHIP.COM.AU
LUCASH@REDCHIP.COM.AUSlide 12

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Put and call options

  • 1. Put and Call Options REAL ESTATE BREAKFAST BRIEFING
  • 2. Legal stuff - disclaimer All material contained in this presentation is delivered by way of general comment. No material should be accepted as authoritative advice and anyone wishing to act upon material contained in this presentation should first contact Redchip for properly considered professional advice, which takes into account specific situations.
  • 3. What are put and call options? Call Option Future right to compel a seller to sell land Put Option Future right to compel a buyer to buy land
  • 4. Call option benefits to buyer • Gives buyer the opportunity to: • Undertake due diligence on land • Lodge/amend a DA • Obtain approvals to develop the land • Secure finance for the acquisition • Source partners pre a ‘fund’ being structured • Gives rise to a caveatable interest in the land in favour of the buyer • The price must be agreed before the call option deed is entered into and will not change, regardless of market fluctuations Slide 4
  • 5. Put options benefits to seller • Secure buyer • Secure a price • Potentially obtain an upfront release of funds for the grant of the put option Slide 5
  • 6. How are they documented? Slide 6
  • 7. A separate agreement that sits on top of the contract
  • 9. How are they documented? • Terminology: • Grantor = Seller • Grantee = Buyer • Complete and valid contract for sale/purchase as annexure • All aspects of transactions agreed prior to option deed • Typically a binding arrangement from signing (subject to the buyer/seller utilising their rights) Slide 9
  • 10. Features • Option fee • Nominal amount • Larger amount in return for the grant of the right to put/call • Option exercise period • Assignment/Nomination • Potential for uplift in purchase price as a buyer to a third party • Allows for an entity/fund to be determined post signing the option Slide 10
  • 11. Stamp duty • Payable by buyer when option exercised (as per usual conveyance) • Implications arise when assigning option or appointing nominee • Advice should be considered Slide 11