All Topics / Legal & Accounting / put and call
hi
can anyone explain a 'put and call' to me please? how binding is it? is there a deposit paid before occupation? is this deposit non-refundable?Hi
These are options. An option is a contract to purchase or sell an item at a certain date in the future. The option quality of the contract means you have the option to take up the purchase or the sale, but not the obligation. There is usally a option fee involved with entering the contract – but this is totally negatiable as are other terms of the contract such as period, wether the option fee is refundible (unlikely) and whether you can occupy the property. Options are as binding as any other contract – if not honoured, you can sue – so look at who you are entering the contract with – do they have assets?
A call option is an option to buy
A put option is an option to sell.With property these are often both entered into so that you are locking into the property.
you should seek expert legal advice regarding these as there are many issues to consider such as stamp duty issues and other contract issues such as waiving cooling off periods etc.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
for NSW look at this
http://www.maddocks.com.au/download/property-june-2005.pdfTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
thanks terry for your worthwhile reply. your posts are always worth reading.
graceIn addition to Terry's comments, a put and call option is also handy in "deferring" a capital gains tax (CGT) event. Normally, if you sell a property, the contract date (not settlement date) is deemed to be when the property is sold for CGT purposes. If you merely execute a put and call option, you are not deemed to have sold the property until the option is exercised. This is important in the context of the availability of the CGT discount.
Eddie
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