Call and Put Option protocol is very useful in real estate transaction.
To put it simply,
Call Option is the rights granted by the seller to the buyer, and the buyer may exercise the rights and require the seller to sell a particular land to the buyer at a specific price at a future time. Colloquially, "you must sell this house to me."
Put Option is a rights granted by the buyer to the seller, and the seller may exercise the rights and require the buyer to buy a particular land at a specific price at a future time. In general, "you have to buy this house."
After the buyer and seller enter the Call and Put Option Agreement, the Purchaser first exercises the rights or does not exercise the rights within a specified period of time.
If the buyer exercises Call Option rights, the seller must formally enter the Land Sale contract with the Purchaser.
If the buyer does not exercise the Call Option rights, the seller depends on whether the Call and Put Option agreement allows the seller to exercise the Put Option. For example, if the agreement requires the seller not to exercise Put Option, in the event that the buyer fails to take the loan, the seller does not exercise Put Option's rights.
If the seller has the rights to exercise the Put Option, it is the seller's turn to exercise or not to exercise the Put Option. within the specified period of time.
If the seller exercises Put Option's rights, the buyer must formally enter the Land Sale contract with the seller.
The Call and Put Option Agreement shall be terminated if the seller does not exercise Put Option rights,.
If either party fails to comply with the agreement, the other party may enforce it through law.
Under what circumstances will the Call and Put Option protocol be used?
The buyer wants to buy the land, but the buyer needs more time to investigate, make a land development application, or make a loan;
Where the buyer does not enter directly into the Land Sale contract, the Purchaser wishes to secure its own interests, that for a certain period of time only the buyer may buy the place or, if the conditions are not satisfied, that the buyer has rights to relinquish the Land; and
Lock in land prices, no matter how volatile the market is.
The other thing that uses Call and Put Option is,
In order to delay the payment of stamp duty, the buyer entered the Call and Put Option, before entering the formal land sale contract.
Non-Australian permanent residence or citizen is temporarily controlled land, over a period of time to sell Call Option's rights.
Non-Australian permanent residence or citizen is temporary control of the land, after conversion to Australia permanent residence, re-enter the land sale contract to avoid FIRB application fees and high stamp duty.
The choice of both Call Option and Put Option, whether to use Call Option or Put Option, only and under what circumstances the two rights can be exercised, depends on whether the buyer's market or the seller's market is at that time.