What is a Put and Call Option?

A Put and Call Option is an agreement, usually between a landowner and a Builder. The agreement allows the landowner to allocate certain blocks to the Builder for their exclusive right to sell to third parties, for an ‘option fee’. The benefit to the landowner is that they have a guaranteed sale because even if the Builder doesn’t find a third party, the ‘put’ option allows them to make the Builder purchase the lot. The benefit to the Builder is that they get to package the land up as a house and land package, guaranteeing their build on that block of land. The risk to the Builder is that if they do not find a third party to purchase the block of land, they are required to.

There is also such thing as just a Call Option. The difference here is that the landowner no longer has the option to require the Builder purchase the lot however if the Builder doesn’t nominate a third party to purchase the lot, they may forfeit their option fee.

Option Deeds entered into between landowners and Builders include certain terms and conditions. Usually the most crucial is the Call Option expiry date. The Call Option expiry date is the latest date that the Builder has to nominate a third party to purchase the land. In most cases, in order to nominate a third party purchaser to purchase the land, the Builder must ensure that a both building and land contracts have been entered into by the Call Option expiry date.

If you would like advice on Put and Call Option deeds please contact Melina Costantino, expert in Conveyancing for Builders and Developers at Coutts Solicitors & Conveyancers.