Pacific Law – Options for Property – 12th November 2025

In this webinar, Derek Sky from Pacific Law delivers a clear, practical walkthrough of Property Options—what they are, how they work, and why sophisticated investors use them to control opportunities without taking on full ownership risk.

The webinar demystifies the legal, commercial and strategic considerations around call options, put options, and put-and-call option deeds, showing investors when and why each structure is used.

What an Option Actually Is

Derek begins by grounding the session in a simple definition: an option is the right, but not the obligation, to buy a property. Unlike a standard contract, an option gives the buyer control over a future purchase date while limiting downside risk if circumstances change. This flexibility is the core reason options are used so powerfully in development, land banking, project planning, and complex acquisition strategies.

He distinguishes between three key forms:
— Call option (buyer’s right to buy)
— Put option (seller’s right to make the buyer purchase)
— Put-and-call option deed (commonly used in developments and larger projects)

Why Use Options Instead of a Contract?

The webinar explores the strategic advantages of options compared to going straight to contract. Options allow investors to:
— secure control without needing finance approval immediately
— conduct extended due diligence
— rezone, DA, market test or obtain JV partners before committing
— manage timing for tax or finance reasons
— mitigate risk if the market environment shifts

Derek emphasises that options are sophisticated tools—not shortcuts—and must be supported by strong legal drafting to ensure the investor’s intention is actually reflected in the documents.

Call Options: Flexibility for the Buyer

A call option grants the investor the right to purchase the property at a set price within a certain timeframe. These are commonly used when the buyer needs time to assess the viability of a project, access finance, or add value (such as obtaining a DA) prior to settlement.

Derek highlights that call options are ideal for situations where the buyer wants maximum flexibility: they can walk away if the project becomes unviable, losing only the option fee rather than risking full contract penalties.

Put Options: Power for the Seller

A put option allows the seller to force the buyer to purchase the property, generally within the same timeframe as the call option. These are used when the seller wants certainty of sale but is willing to delay settlement for strategic, tax or logistical reasons.

Derek explains that many developers encounter put options when dealing with larger landowners or sophisticated vendors who want structured, staged, or conditional exit arrangements.

Put-and-Call Option Deeds: Common in Complex Deals

This combined deed creates a legal structure that benefits both parties and is extremely common in development sites, off-the-plan arrangements and multi-stage projects. Derek outlines how these deeds operate, including timing of exercises, assignment rights, option fees, and the requirement for two separate contracts within the overarching deed.

These documents must be drafted precisely—poor wording can accidentally trigger stamp duty, expose parties to early liabilities, or weaken control.

Stamp Duty & Tax Considerations

One of the biggest risks with options is unintentionally triggering stamp duty. Derek explains the circumstances under which duty may be payable on the option itself, the grant of the option, or the eventual contract—and why getting advice before signing is critical.

He also covers tax timing, GST implications, and how options interact with landholder rules and related-party arrangements. For investors in development, these issues determine whether a project remains profitable or becomes financially unviable.

Assignment of Options (Selling the Deal)

Options often allow the buyer to assign their rights to another party—for example, selling the deal to a developer, JV partner, or builder. Derek reviews what assignment involves, how it must be drafted, and why the clause must be explicit rather than implied.

He also notes that assignment isn’t always permitted by vendors and must be negotiated carefully.

Common Mistakes and Myths

Throughout the session, Derek addresses misconceptions frequently seen in the ILRE community, including:
— believing an option guarantees the ability to assign
— assuming a vendor will accept an option just because it helps the buyer
— misunderstanding when stamp duty becomes payable
— thinking options replace proper due diligence
— using template documents without legal guidance

His strongest message: options amplify opportunity, but they also amplify risk if they’re drafted poorly or misunderstood.

Best Practices When Using Options

Derek outlines the steps investors should follow:
— engage a lawyer early—before presenting the option to the vendor
— avoid generic templates; use tailored, deal-specific drafting
— ensure clarity on timeframes, fees, obligations and triggers
— understand the commercial negotiation from both sides
— keep communication with vendors transparent and realistic

He reinforces that every option must match the specific intention of the investor—there is no one-size-fits-all option deed.

Key Takeaway

Property options give investors the ability to control property without committing to a full contract immediately, allowing time to de-risk, negotiate, plan and add value. But they are powerful tools that require precise drafting, clear intention, and expert legal guidance. When used correctly, options can unlock deals that traditional contracts simply can’t achieve.

Action Items

• Carefully review the option agreement process and documentation to ensure it is followed strictly when exercising an option.
• Obtain advice from someone experienced in options to understand the tax and duty implications, as they can vary significantly by state.
• Reach out to Pacific Law to discuss a specific deal and get their input on the best way to structure it using an option agreement.