Put and call options in Queensland property development: how they work and where they go wrong

Published 24 September 2026

Developers in Queensland rarely buy sites the way an ordinary purchaser buys a house. A standard contract commits the buyer to settle within weeks, long before a development approval exists and long before finance is in place. A put and call option deed solves that problem. It lets a developer secure a site now, spend the option period getting the project ready, and settle once the numbers stack up.

What a put and call option deed is

An option is a contractual right to bring a sale contract into existence at a future time. A call option gives the buyer the right to require the seller to sell the property on agreed terms. A put option gives the seller the right to require the buyer to buy. A put and call option deed combines both rights in a single document.

A properly drafted deed has a complete contract of sale annexed to it. When either party exercises its option, the annexed contract comes into existence on terms that were fixed when the deed was signed. Nothing is renegotiated at exercise. The price, the settlement period, the conditions and the special conditions were all agreed up front.

The combination matters commercially. A call option alone leaves the seller waiting to see whether the buyer will ever exercise. Adding the put option gives the seller certainty, because if the call option lapses the seller can compel the purchase. Each party holds a mechanism to force the sale.

How the deed works in practice

Most Queensland put and call option deeds follow a common sequence.

1. Option fee. The buyer pays the seller a fee for the grant of the call option. The deed should state whether the fee is credited against the price at settlement and whether it is refundable if the option lapses.
2. Call option period. The buyer has a defined window in which it can exercise the call option, typically by serving a written notice together with a signed copy of the annexed contract and paying the deposit.
3. Put option period. If the call option lapses unexercised, a shorter put option period usually begins, during which the seller can compel the buyer (or the buyer’s nominee) to enter into the contract.
4. Contract and settlement. Once either option is exercised, the parties perform the annexed contract in the ordinary way, including settlement on the agreed timetable.

The deed can also include extension rights, often in exchange for further option fees, and conditions that must be satisfied before exercise, such as the grant of a development approval.

Why developers use put and call options

Three commercial drivers appear in almost every option deal.

Control without settlement

The developer ties up the site at a fixed price without having to fund the purchase on day one. Capital that would otherwise sit in land is available for design, consultants and application fees. The seller keeps the land, and often the income from it, until the option is exercised and the contract settles.

Time to obtain the development approval

Option periods are commonly set to run past the expected approval timeline, so the developer only becomes committed once it knows what it is allowed to build. A well drafted deed obliges the seller to cooperate during this period, including providing the owner’s consent needed to lodge a development application over the land, giving access for surveys and investigations, and refraining from further encumbering the property. If the approval is delayed or its conditions damage feasibility, the developer can let the call option lapse and lose only the option fee, subject always to the seller’s put option.

Staged funding and capital raising

An executed option deed is a document a developer can take to financiers and equity partners. It proves site control, fixes the land cost and defines the timeline. Many developers use the option period to finalise their capital stack, often through joint ventures with landowners or investors. The usual vehicle is a joint venture agreement for property development. Options are also used to aggregate adjoining lots from separate owners, with each deed conditional on the others, so the developer never owns half an amalgamated site.

Nomination and assignment

Developers rarely want the entity that signs the option deed to be the entity that settles the purchase. The usual plan is to establish a special purpose vehicle once funding and the business structure for the development are settled. The deed accommodates this in one of two ways.

• Nomination. The deed permits the buyer to nominate a related or third party entity to enter into the annexed contract as purchaser when the option is exercised. The nomination right should state who may be nominated, whether the seller’s consent is required, and whether the original buyer remains liable if the nominee defaults. Sellers usually insist that the original buyer guarantees the nominee’s performance.
• Assignment. The buyer transfers its rights under the deed itself to another party, who then stands in the buyer’s shoes. Assignment is more intrusive than nomination and sellers commonly restrict it or require consent.

Nomination and assignment are also where option deals earn their reputation for duty complexity. A nomination made for payment, or an assignment of the option for value, can be treated very differently from a simple exercise by the original buyer.

Transfer duty considerations

Transfer duty in Queensland is governed by the Duties Act 2001 (Qld), and options sit in one of its more technical corners. Some general points can be made, but the detail depends on the specific arrangement and should always be checked before signing.

• Duty is payable on the contract that comes into existence when the option is exercised, assessed in the ordinary way on the transaction.
• Dealings with the option itself can attract duty separately. Assigning a call option for value, or making a nomination in circumstances that amount in substance to trading the option, can trigger a duty liability in addition to the duty on the eventual transfer. Poorly structured arrangements can produce double duty.
• The characterisation of the option fee, any extension fees and any consideration passing on nomination all feed into the assessment.
• Timing matters. Restructuring after execution is far harder than building the right structure into the deed at the start.

Because thresholds, rates and administrative practice change, we have kept this description general. Obtain specific duty advice on any option arrangement before it is signed, particularly where a nomination or assignment is contemplated.

Drafting traps that cause disputes

Most option litigation traces back to a small set of avoidable drafting failures.

• Loose exercise mechanics. Courts tend to require strict compliance with exercise requirements. If the deed requires notice to a particular address, accompanied by a signed contract and the deposit in cleared funds by a set time, a defective exercise may be no exercise at all. Keep the mechanics simple and diarise the deadlines with a margin for error.
• An incomplete annexed contract. The annexed contract must be capable of immediate performance, with the price, deposit, settlement period and special conditions fully stated. Queensland’s seller disclosure scheme under the Property Law Act 2023 (Qld) also has to be dealt with correctly in the option context, because disclosure obligations attach to the contract the option creates, and the Queensland seller disclosure scheme fixes what sellers must give buyers and when.
• Option periods that ignore the approval timeline. If the call option expires before the development approval can realistically be obtained, and there is no extension right, the developer faces a forced choice between exercising blind and walking away. Extension rights, approval conditions and long stop dates should be modelled against the actual planning pathway for the site.
• No seller cooperation obligations. Without express clauses, the seller has no duty to consent to development applications, provide access or keep the property unencumbered. Each of these should be spelled out.
• Silence on caveats. The deed should state whether the buyer may lodge a caveat to protect its interest, and on what terms it must be withdrawn if the option lapses.
• Silence on GST. How GST applies to the option fee, any extension fees and the sale itself should be stated expressly.
• Execution defects. These documents are deeds and must be executed as deeds by each party, including any trustee and corporate parties, with guarantees signed where required. Execution defects discovered at exercise time are expensive.

Frequently asked questions

What is the difference between a call option and a put and call option?

A call option gives only the buyer a right to compel the sale. A put and call option gives the buyer a right to compel the seller to sell and gives the seller a matching right to compel the buyer to buy if the buyer does not exercise first. Sellers generally prefer the combined deed because it gives them certainty of an exit, and the two structures can be treated differently for duty purposes.

Can the buyer nominate another entity to complete the purchase?

Yes, if the deed contains a nomination clause. Developers commonly sign the deed in one entity and nominate a special purpose vehicle once funding is settled. The clause should define who can be nominated, whether consent is needed and who remains liable. Nominations made for payment can have duty consequences, so the intended structure should be resolved before the deed is signed.

Does transfer duty apply to a put and call option in Queensland?

Duty applies to the contract created when the option is exercised, and separate duty consequences can arise from dealings with the option itself, such as an assignment for value or certain nominations. The rules are technical and turn on the facts of each arrangement, so specific advice should be obtained before signing rather than at exercise.

What happens if the development approval is not granted before the option period ends?

That depends entirely on the deed. If it includes extension rights or makes exercise conditional on approval, the developer has room to move. If it does not, the call option simply lapses, the option fee is usually forfeited, and the seller may then be able to exercise the put option and compel the purchase. This is why option periods and extension rights should be set against a realistic approval timeline from the outset.

Every option arrangement turns on its own terms, structure and duty position. If you are considering a put and call option for a Queensland site, as a developer or as a landowner, contact GRM LAW’s property and development team for advice before you sign.

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.