Contract methods

The primary structures to acquire commercial property are:

• • a contract with reciprocal obligations and rights to buy and sell;
• • a call option;
• • a call and put option;
• • acquisition of the property itself; and
• • acquisition of shares in the company, or otherwise taking control of an entity which owns the property, such as a unit trust.

Call option

A call option is granted by the vendor to the purchaser. A call option gives the purchaser an option but not an obligation to purchase the underlying property at an agreed written price at a specified time in the future.

While the grant of a call option is not dutiable, the following events will give rise to a stamp duty liability assessed on the ad valorem rate of duty:

• • exercise of the call option;
• • an assignment of the grantee's rights in the call option; or
• • exercise of the option by the nominee.

Put option

As a put option is “given” by the prospective purchaser, that party is the grantor and the owner of the land is the grantee.

A put option gives the grantee a right to “put” the land to the grantor — the grantor is then required to buy the land. The consideration for the grant of the put option will be the put option fee and the period during which it can be exercised will be the put option period. Upon the exercise of the put option by the grantee, the grantor is required to buy, and the grantee is required to sell the land.

Put and call option

A put and call option is a combination of a call option and a put option in respect of the one parcel of land. It is usually contained in a deed (although can be an arrangement arising in separate documents) and comprises:

• • a call option granted by the owner of land entitling the prospective purchaser, on the valid exercise of the call option during the call option period, to require the owner to enter into a contract for the sale of the land with the prospective purchaser to sell the land; and
• • a put option entitling the owner, on the valid exercise of the put option during the put option period, to require the prospective purchaser to enter into a contract for the purchase of the land with the owner.

Usually, but not always, the call option period precedes the put option period. This enables the owner of the land to require the purchase of the property if the grantee has not exercised the call option.

Incidentally, the put option is not the acquisition of a new right and so a put option agreement is not a dutiable transaction. See Call and Put options above.

Contract for the sale of land

Cooling off periods

A put and call option is a combination of a call option and a put option in respect of the one parcel of land. It is usually contained in a deed (although can be an arrangement arising in separate documents) and comprises:

Unit Sale Agreement/Share sale agreement

This is a set number of days after your client makes a purchase in which they can cancel the transaction. On cancellation, they may have to pay the seller a fee but it is generally not a significant amount. However, in some jurisdictions where statutory cooling-off periods apply in a contract for the sale of land, there is no cooling-off period if the property was sold at auction or the underlying property is not residential. See Cooling off period above.

See Contract methods.