Keep Your Options Open in Conveyancing.
There are different options for purchasing a property other than a straight House and Land Contract. Sometimes a mechanism known in conveyancing as a Put and Call Option is used. A Put and Call Option is useful when two parties want the ability to make sure the other party has to buy, or sell, as the relevant case may be, but they do not want the Contract to be formed at this time. The reasons may be many and varied, but usually revolve around implications for taxes and stamp duty.
The most common Put and Call Option will have the actual Contract that is eventually to be signed sometime in the future, annexed to the Put and Call Option itself. In this manner, all the terms are agreed, it is just that the Contract itself is not signed yet.
This is what happened in a conveyancing matter that had to be ultimately decided by the Supreme Court of Queensland recently. In this instance the Contract, in the form used at the time, was annexed to the Put and Call Option. However, some time passed between the Put and Call Option being signed and the time for the exercise of the option. As it happened, it was the Seller that exercised its side of the Option (being the “Put Option”). To do this correctly, the Seller had to deliver to the Buyer a Put Option Notice, together with the Contract in the form that it was annexed to the Put and Call Option. As time had passed, the standard form contract issued by the Real Estate Institute of Queensland had been updated, and was no longer in the exact form as that annexed to the Contract. Regardless, the Sellers used the new version.
To cut a long story short, the Court held that the changes in the standard terms of the new version of the Contract as opposed to the version attached to the Put and Call Option, meant that it was impossible to say that any difference was immaterial. The upshot is that it was found by the Court that the exercise of the option was not valid, as the Contract was not in the required form. As such, the Seller was not able to enforce the Contract with the Buyer and lost the sale.
This is a very important lesson for both buyers and sellers of all property, not just residential property. To avoid this and other unforeseen stumbling blocks, make sure that your solicitor is experienced in all aspects of conveyancing, regardless of whether you are selling or buying residential or commercial property.