‘Call and Put’ Property Option Disputes
We are experienced in property disputes which involve a ‘call and put’ option. Contact one of our property dispute lawyers for a consultation.
‘Call and Put’ property option disputes usually involve a developer, who has made an offer to purchase some land, and a vendor, who has agreed to sell their land at a certain price. However, instead of purchasing the land outright immediately, the developer may wish to enter into a contract which locks in the price of the land but does not require payment until many months, or even years, into the future. If or when the developer is ready to proceed with the purchase, they may force the vendor to sell by exercising the ‘Call Option’.
The usual reason why vendors agree to such contracts is because if the developer does not wish to go ahead with the purchase, they will forfeit a much larger sum of money than they would ordinarily (usually at least 20% of the purchase price instead of the usual 10%). This means that should the developer not go ahead with the purchase, the vendor can retain a large sum of money and then choose to resell it to another. However, in the event that the vendor does wish to force the developer to buy the land (which usually happens in a downward market), they can choose to do so. This is called exercising the ‘Put Option’.
Frequently, developers purchase large amounts of contiguous land in the hope that they will be able to get it re-zoned and reap the benefits of development. However, sometimes they fail to obtain re-zoning or find other obstacles which cannot be overcome or would make the development unprofitable. It is usually in these situations where a lawyer experienced in ‘Call and Put’ options is critical.
If you are vendor who wants the developer to purchase your land, it is critical the ‘Put Option’ is exercised in accordance with the deed, along with any other obligations. If it is not, you may inadvertently forfeit or waive your right to force the developer to the purchase and, as a consequence, forfeit a large sum of money. If you are a developer who wants to get out of the deed, careful analysis must be carried out before taking any action. Making an error could result in you repudiating the deed, meaning that the vendor could sue you for damages far in excess of any deposit you have already paid to the vendor. Some of the ways to get out of deed involve technical breaches of the relevant legislation or common law, which require, among other things:
that the option deed include the full contract for sale, including all documents required by the Conveyancing (Sale of Land) Regulation 2017 (NSW)
that the option deed does not permit the ‘Call Option’ to be exercised within 42 days of the date it was granted by the vendor
that where there are both ‘Call and Put’ options, there be some consideration exchanged (usually a nominal sum of money)
Disputes involving ‘Call and Put’ options deeds require a lawyer familiar with the relevant legislation and the common law. Our lawyers have acted for many clients involved in ‘Call and Put’ option disputes and have the experience and drive to help you resolve the dispute. Contact the team at Pagin + Mak Lawyers for a free first initial phone consultation. We are more than happy to discuss any questions you may have and explain the process in greater detail.
Disclaimer:
The information above is intended as general information only and should not be relied on. You should discuss your individual situation with a lawyer.
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