'call' or 'put and call' Option agreement?

Viewing 6 posts - 1 through 6 (of 6 total)

coalstar
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@coalstar
Join Date: 2007
Post Count: 122
February 6, 2011 - 11:53 am
Hi all,
Can someone please clarify the difference between a "call' option and 'put and call' option?
I've heard that a put and call option must be called on as such when the contract is up, that is settlement must take place.
not too sure though!
thanks
Paul Dobson
Participant
@pauldobson
Join Date: 2003
Post Count: 1,196
February 6, 2011 - 12:36 pm
Hi Coalstar
At the risk of mentioning another forum there's a thread on this subject at:
http://www.somersoft.com/forums/archive/index.php/t-12070.html
Cheers, Paul
Paul Dobson | Vendor Finance Institute
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An alternative way to finance your home.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
February 7, 2011 - 11:50 pm
A call option is one which gives you the right, but not obligation, to buy something.
A put option is one which gives you an obligation to sell if the other party exercises their option.
These used to be used as a way of locking someone into a purchase, but giving them the ability to onsell without have to pay stamp duty, by assigning their option to a new purchaser who would settle. But this 'loophole' has been closed by most states now – in NSW the Duties Act was amended many years ago to make stamp duty payable by the middle man as well as the final purchaser.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Scott No Mates
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@scott-no-mates
Join Date: 2005
Post Count: 3,856
February 8, 2011 - 1:05 am
That's why my solicitors have advised against it – doesn't save anyone anything, probably ends up costing them more at the end of the day.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
February 8, 2011 - 1:08 am
yeah, i can't really see any point – except maybe keeping your name off title records?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Andrew_A
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@andrew_a
Join Date: 2003
Post Count: 392
February 8, 2011 - 1:39 pm
Last time I used a put/call option it was to postpone a financial event till the next year for the seller, I definitely wanted the property and hence the option was superior to a contract with a longer settlement.