Put and call options: securing Queensland land before the contract

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Kooky

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Most Queensland property changes hands under a contract signed within days of agreeing a price. An option deed fixes the land, the price and the form of the contract today, but leaves open whether, when and sometimes with whom the sale contract will be made. Developers use options to assemble sites while they test planning and finance. Buyers use them to hold a property while they settle on the entity that will own it.

The document is short on the surface and technical underneath. Transfer duty can arise on the deed itself, well before any sale. The seller disclosure regime that began on 1 August 2025 reaches options as well as contracts. This guide sets out what each kind of option does, how the fee and the option period operate, what nomination means, and how duty, disclosure, cooling-off, caveats, GST and capital gains tax apply in outline. The rules are general; how they apply depends on the deed.

Three kinds of option, three different promises

An option, as the Queensland Revenue Office's public ruling on the surrender of options puts it, is a right to buy or sell a specified asset at a particular price. The owner who gives the right is usually called the grantor and the person who receives it the grantee.

Queensland law firm Miller Sockhill Lawyers, in a 2022 explainer, describes the usual deed as holding two options at once. The call option is the grantee's right to buy within a set period. The put option runs the other way: the owner may require the grantee to buy within a set period. Neither side is bound to exercise its own option, but each is bound if the other does.

A call option alone is a one-way bet for the grantee. A put and call deed is much closer to a sale that has simply not been signed yet, which is why courts and revenue offices look at its substance.

The option fee and whether it counts toward the price

The grantee pays an option fee for the call option. Rouse Lawyers, a Queensland firm, describes the fee as consideration for the grant: it becomes the owner's money. That is the main difference from a deposit, which is held against a contract and can come back to the buyer if the contract is validly ended.

Whether the fee is credited to the price is a matter for the deed, not for any statute. Some deeds treat it as a separate payment on top of the price. Others say it forms part of the purchase price if the option is exercised. The choice has a duty consequence covered below, because the Queensland Revenue Office allows a credit only where the option agreement itself says the fee is part of the price.

Two warnings appear in the commentary. Miller Sockhill observes that the fee is often set at a nominal sum, with further "security deposits" payable as conditions are met, and that an amount which is never refundable may be treated as consideration. Rouse Lawyers adds that releasing a non-refundable amount to the owner, or folding the fee into the contract deposit, may bring the arrangement within the rules for instalment contracts. The Property Law Act 2023 defines "contract" in its instalment contract division to include an option to purchase land, and treats an "option fee" as its own category. Whether a payment structure crosses that line depends on the drafting.

The option period and how an option is exercised

Each option has its own window. Miller Sockhill notes that the two periods may run one after the other, overlap or run together. The common pattern in a put and call deed is a call period first, followed by a shorter put period that opens if the grantee has not called.

An option is exercised by doing exactly what the deed says: usually giving a written notice, in the stated form, to the stated address, inside the period, often with a signed contract and the deposit. Queensland cases show how much turns on the wording.

In litigation that reached the Queensland Court of Appeal in 2008, a developer held put and call option deeds over two lots at Rochedale. The trial judge found the developer had not exercised its options within the agreed period and refused specific performance; the Court of Appeal dismissed the appeal, agreeing that a notice extending the period had not been given within a reasonable time and that the call option was intended to expire with the put option. The developer's caveats were removed.

A 2024 Court of Appeal decision about a call option over a pharmacy business went the other way on a different point: a $10 option premium paid late did not, on that deed, stop the grantee exercising the option. Timing is read from the particular deed, never assumed.

The contract attached to the deed

An option to buy "on terms to be agreed" is an invitation to a dispute. Miller Sockhill lists what a deed must make certain: the parties, the option period, the option fee and purchase price, and the property, with a copy of the proposed contract of sale attached.

That annexed contract deserves the same attention as any contract a buyer or seller would sign directly, because on exercise it becomes the bargain without further negotiation. Its settlement date, deposit, conditions and special conditions are fixed on the day the deed is signed, possibly a year or more before anyone relies on them. A finance or due diligence condition in the annexed contract also changes what the put option is worth to the owner: Miller Sockhill points out that an owner who puts the property to a buyer under a conditional contract may still see that contract validly terminated.

Naming another buyer: the nomination clause

Many deeds let the grantee name someone else to take the property. Miller Sockhill gives the two usual reasons: a buyer who wants to lock in a price before deciding which entity will purchase, and a grantee who intends to find another buyer altogether. Adding "and/or nominee" to an ordinary contract is a different mechanism, covered in a separate guide.

The drafting question is who exercises the option and who ends up as the buyer. Rouse Lawyers describes the structure the commentary regards as safer for duty: the grantee, not the eventual buyer, exercises the call option, and the eventual buyer takes rights only under the resulting contract, never under the deed. If the nominee is given rights under the option itself, both firms warn that the arrangement can be treated as an assignment of the option, with a second layer of duty.

Owners have their own interest in the clause. A nominee may be a newly formed company with no assets. Miller Sockhill suggests two protections an owner may ask for: a guarantee by the grantee of the nominee's performance, and a put option that stays alive until a set time after any nominee contract ends or the nominee defaults.

How Queensland transfer duty treats an option

Duty is where Queensland options most often surprise people, because the charge does not wait for a sale.

The Queensland Revenue Office's guidance on option agreements, last updated on 25 October 2024, says an option agreement is dutiable if it relates to dutiable property such as Queensland land, and that these transactions generally must be self-assessed. It treats an option as usually involving two transactions, each assessed separately on its own consideration: the option agreement, and the later agreement to transfer the property once the option is exercised. The grant of an option to purchase is the acquisition of a "new right". Public Ruling DA009.1.1, issued on 24 February 2009 and still current, puts it in terms of the Act: granting an option to purchase Queensland land creates an interest in land and is dutiable under section 9(1)(f) of the Duties Act 2001.

Four consequences follow from the published material.

• Duty on the grant. The guidance says duty applies to the whole of the option consideration, even where part depends on a condition that is never met. Its example is a $5,000 fee with a further $10,000 payable if a condition is satisfied: duty is assessed on $15,000. Rouse Lawyers and Miller Sockhill both state that the dutiable value is the higher of the fee and the market value of the right, so a nominal fee does not necessarily mean nominal duty.
• A credit on exercise. The contract formed on exercise is dutiable as an agreement for the transfer of dutiable property, which section 9(1)(b) covers "whether conditional or not". Where the option agreement states that the option fee forms part of the consideration, the guidance says a credit for the duty paid on the option is allowed under section 23.
• Dealing with the option. The guidance treats the transfer of an existing option as a transfer of an existing right, which is itself dutiable. DA009.1.1 rules that the surrender of an option to purchase Queensland land is dutiable under section 9(1)(c) as a surrender of an interest in land.
• Put options. Rouse Lawyers states that a put option is not the acquisition of a new right and is not dutiable on that footing. The Revenue Office's guidance speaks of options to purchase and does not address put options by name.

On the question that most concerns developers, whether a put and call deed is treated for duty as the sale itself, the published Queensland material is thin. Neither the option agreements guidance nor DA009.1.1 distinguishes a put and call deed from a bare call option, and no current Queensland public ruling devoted to put and call options was found in research for this guide. What the Act does say is that an agreement to transfer is dutiable even if conditional, and that where a transaction fits more than one category the Commissioner of State Revenue must decide which is the most applicable (section 21). How a deed that binds both sides is characterised therefore depends on its terms and on the Commissioner's view of them.

Nomination has a duty dimension of its own. Under section 22(3), no further duty is imposed where a buyer contracted as agent for a principal and the property is later transferred to the principal, but only if conditions are met. Practice Direction DA022.1.1, effective 8 April 2024, lists them: a written appointment of the agent, an agreement entered into under it on the principal's behalf, all of the money including any deposit provided by the principal, duty paid on the agreement, and statutory declarations from both. A grantee who paid the option fee from its own pocket and then passes the deal to an unrelated buyer is in a different position, which is where the "double duty" warnings in the commentary come from.

Seller disclosure when an option is granted or exercised

Since 1 August 2025 a Queensland seller must give a buyer a disclosure statement and prescribed certificates before the buyer signs. King and Wood Mallesons, in a note dated the day the scheme began, says the regime applies to contracts and to options, naming call options, put options and put and call options, and that disclosure is due before the buyer signs the contract or the option, as applicable.

The Act then avoids doubling up. Macpherson Kelley, in a July 2025 note on the exceptions in section 100, explains that a contract arising from the exercise of an option is excepted where the grantee itself becomes the buyer and the seller gave the disclosure documents before the option was granted. Options granted before 1 August 2025 are outside the scheme altogether under the transitional rule in section 251(2): the contract formed on exercise does not attract the regime.

A nominee changes the answer. Both firms say the exception does not apply where the grantee nominates a third party, related or not, and that the seller must make disclosure to the nominee. They put the timing slightly differently: Macpherson Kelley says before the contract is signed, King and Wood Mallesons says before the option is exercised. A seller facing a nomination would want that settled against the Act and the deed, not assumed.

Macpherson Kelley also notes that a long gap between grant and exercise can leave the disclosed information well out of date by the time a contract exists, and that deeds may need to say how that is handled.

Does a cooling-off period apply?

The cooling-off period for residential contracts is the subject of another guide; the question here is only whether options fall inside it. The Office of Fair Trading's published list of exceptions says the five business day period does not apply to option contracts, or to sale contracts that arise from an option contract.

That statement is broader than some of the legal commentary. Colin Biggers and Paisley, writing in 2014 when the Property Occupations Act was before Parliament, described the exclusion as covering a contract that arises from the exercise of an option where the parties to the contract are the same as the parties to the option. On that reading, a contract with a nominee is not clearly excluded. In 2010 the Queensland Court of Appeal held, under the earlier Property Agents and Motor Dealers Act, that a put and call option deed over residential units was itself a contract for the sale of residential property, so the grantee was entitled to the buyer protections of the time. That Act has been replaced and the decision does not state the current rule, but it shows a court looking at what a deed obliges the parties to do.

For a buyer, the practical meaning is that an option over a home should not be signed on the assumption that five business days remain to reconsider.

Caveats, and what happens if the option lapses

An option deed is not registered on the title. An owner who has granted one could, in breach of the deed, sell or mortgage to someone who knows nothing of it. The usual protection is a caveat, and RMO Law, a Queensland firm, lists a grantee's interest under an option to purchase land among the recognised caveatable interests. In the Rochedale case mentioned earlier, the developer had lodged caveats on the strength of its option deeds.

The general mechanics of caveats are covered in a separate guide. Three points matter for options. A caveat lodged without the owner's consent lapses after three months unless the caveator starts court proceedings, and after 14 days if the owner serves a notice requiring them, according to RMO Law. A caveat lodged with the registered owner's consent does not lapse in that way, which is why well-drafted deeds deal with consent expressly. And under section 130 of the Land Title Act 1994, a person who lodges or continues a caveat without reasonable cause must compensate anyone who suffers loss, a real exposure for a grantee who leaves a caveat in place after the option has ended.

If the call period ends without exercise and there is no put option, or the owner chooses not to use it, the deed comes to an end. The fee stays with the owner, because it was the price of the option and not a deposit. The grantee's interest ends with the option, and with it the basis for any caveat.

Duty already paid on the grant has no later contract to be credited against, since the section 23 credit described by the Revenue Office operates only when the option is exercised. Ending a deed early by agreement is not a neutral step either: DA009.1.1 treats a surrender of an option to purchase Queensland land as a dutiable transaction in its own right.

The figures below show how the same deed plays out three ways.

On the published guidance, the section 23 credit is available in the first row and not in the second.

GST and capital gains tax in outline

Tax follows the same two-stage logic. On GST, the Australian Taxation Office's determination GSTD 2014/2 treats the grant of a call option as a supply separate from the land, taxed when the option is supplied. When the option is exercised, the land is a later supply, and under section 9-17 of the GST Act the consideration for it is limited to the additional amount paid on or in connection with exercise. The determination adds a point developers watch closely: for the margin scheme, the option fee is not part of the consideration for acquiring the land, even where the contract says the fee forms part of the price.

On capital gains, the Tax Office's guide to capital gains tax says granting an option is CGT event D2, which happens when the option is granted. The owner's gain is the fee less the costs of granting it, and the CGT discount does not apply. If the option is later exercised, that gain is ignored and the fee is treated as part of the capital proceeds of the sale; the guide's own example adds a $10,000 fee to a $200,000 price to give proceeds of $210,000, and notes that an earlier year's assessment may need amending. If the option is never exercised, the gain on the grant stands. The sale itself is CGT event A1, timed, according to the guide's summary of CGT events, when the disposal contract is entered into. Under an option that is the contract formed on exercise, which may fall in a later income year than the deed.

When options are sold to retail investors

Everything above concerns an option negotiated between an owner and a buyer over a particular property. A different product uses the same word. ASIC's Moneysmart service, on a page updated on 1 September 2026, describes land banking schemes in which a developer divides land into blocks and investors buy either a plot or an option to purchase one, with the option usually triggered when the council approves development. Moneysmart warns that approval may never come, that some option agreements end under a sunset clause if the land is not rezoned or developed by a set date, and that option holders can lose all their money, including fees and commissions. It suggests asking the council directly about the land's prospects and checking whether the offer is a regulated managed investment scheme with a product disclosure statement.

An option deed postpones the contract, not the consequences. Duty, disclosure and tax each start counting from the day the deed is signed.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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