Notwithstanding the above differences between a put option and a call option, the following features are much the same between the two. Option agreements may have delays in which a party can exercise its option or, in another way, option periods may be triggered by specific events (for example. B, the buyer who obtains a development authorization). However, there are some drawbacks in using a sales and call option instead of a regular contract. They are more complex than a standard REIQ document and therefore require more time and right for production. In addition, the option agreement must be carefully developed to avoid unintended tax consequences. Depending on how it is written, the buyer does not apply a stamp duty on the option contract, but on the contract. For the seller, capital gains tax on the purchase price is only triggered when contracts for the sale and purchase of land are exchanged, while the initial option tax can be paid by a capital gains tax. Therefore, options, if properly formulated, can be an advantageous way to engage in a real estate transaction without immediate tax debts. Often, there is a buyer who has entered into an option agreement and has not yet exercised the appeal option. Under these conditions, it may be possible for the buyer, under the contract, to transfer his rights to a third party.
Once the assignment is complete, the third party assumes the buyer`s obligations as if it were the original buyer in accordance with the contract. The third party and the seller will then continue the agreement until the conclusion. However, put and call options are often combined in a transaction called put and call to achieve the same effect as a conventional contract. If the buyer does not exercise his call option, the seller may force the buyer to continue under the Put option. Regardless of whether you intend to sell the property or not, it is often a good strategy to give you the opportunity to do so as another exit strategy. Circumstances change and flexibility always helps you manage these changes. The best option usually depends on who the seller is, who is the likely buyer and the nature of the site. While the ultimate buyer will be a demanding developer, he should not be too discouraged by giving you a boost as part of an appointment/transfer agreement. On the other hand, if it`s a 1 in 2 subdivision with a buyer of mom and dad, then you could fight to make them a purchase as part of a nomination/assignment contract. The requirements of PAMDA (section 365-366B) must continue to be met as a purchase option is a land sale contract, i.e.
a Form 30C, BCCM fact sheet must be attached to the option (if any) and the contract or parties are not bound by the contract. When a third party is designated for purchase, the PAMDA requirements must be met again when exercising the option. The sale and call options delay the establishment of the contract and effectively bind the parties to the agreement before the contract is concluded. Our Call Option lawyers have listed the following reasons: A put option can be structured so that it can be exercised at any time.