Put and call options in QLD property: how they work

Quick answer: A put and call option is a contract that lets a buyer force a sale (the call) and lets a seller force a purchase (the put), usually months or years before the property actually changes hands. In Queensland they are used for staged developments, related-party deals and transactions where the buyer needs time before settlement. They are also one of the easiest ways to trigger a duty bill you did not expect.

What is a put and call option?

It is two options in one document over the same property.

• The call option gives the buyer the right to require the seller to sell, exercisable during a set window.
• The put option gives the seller the right to require the buyer to buy, usually exercisable in a later window if the buyer has not called.

Between them, the property is effectively committed. If the buyer does not exercise the call, the seller exercises the put, and the sale happens anyway. That combination is what makes it commercially useful and legally sharp.

Why use a put and call option instead of a contract?

Four common reasons in Queensland:

• Time. A developer wants a site locked up while they pursue a development approval, without settling and carrying the holding costs.
• Staging. The parties want the sale to complete in a later financial year, or after a subdivision registers.
• Onsale and nomination. The option holder may want the right to nominate someone else to take the transfer.
• Certainty for both sides. The seller is not left waiting indefinitely, because the put gives them a way to force completion.

Do you pay stamp duty on a put and call option in QLD?

Yes, and this is where people get caught. Transfer duty is assessed on the eventual transfer, but the option arrangement itself can attract duty, and where an option is assigned or a buyer nominates a third party there can be a second dutiable transaction. It is entirely possible to pay duty twice on one property.

The option fee, the exercise price and how the documents are drafted all feed into the assessment. This is not a place for a template. Get the duty position confirmed before anyone signs, not after. Our QLD stamp duty calculator will give you the base transfer duty figure, but an option structure needs a look from a lawyer.

What is an option fee and is it refundable?

The buyer normally pays a call option fee for the right to call. Whether it is applied to the purchase price on completion, or forfeited if the option lapses, is a matter for the drafting. Assume nothing. A fee that is described as non-refundable in one clause and creditable in another is a dispute waiting to happen.

What happens if the option is not exercised?

If the call window closes without the buyer exercising, the put window usually opens and the seller can compel the purchase. If neither is exercised, the arrangement ends and the parties fall back on whatever the document says about the option fee. The dates are everything – option deeds are strictly construed and a missed exercise date is very hard to argue your way out of.

Can a put and call option be assigned or nominated?

Often yes, but only if the document allows it, and the duty consequences of assigning differ from the consequences of nominating. If the plan is for a related entity or a later-formed trust to take the transfer, say so at the drafting stage. Retrofitting a nomination right afterwards is expensive and sometimes impossible.

What should you check before signing an option deed?

• The exercise windows, and exactly how notice must be given
• Whether the option fee is creditable, forfeited, or both in different clauses
• Nomination and assignment rights, and who bears the duty
• What happens if a development approval is refused or delayed
• Whether the seller can deal with the land in the meantime, and whether the option is protected by a caveat
• The GST treatment, particularly on development sites and the margin scheme

Considering a put and call option on a Queensland property? This is specialist drafting and the duty exposure is real. Talk to our commercial property team or get in touch before you sign anything.

Frequently asked questions

Is a put and call option the same as a contract of sale?

No. A contract commits both parties to a sale now. A put and call option creates rights to force a sale later. The practical outcome can be similar, but the duty treatment and the timing are not.

Can you caveat a put and call option in Queensland?

An option can give the holder a caveatable interest, but it depends on the drafting. If protecting your position on title matters, it needs to be dealt with expressly in the document.

How long can a put and call option run for?

There is no fixed limit and development options commonly run for one to three years or longer. Longer terms raise more questions about what happens to the land in the meantime.

Do you pay duty twice on a put and call option?

You can. Where an option is assigned or the transfer is taken by a nominee, there may be two dutiable transactions. Confirm the position before signing.