Option to purchase, Lot 14 on RP 88213

Option to purchase agreement with a fee, a window and a caveat

An option to purchase buys time rather than land. The grantee pays a fee for the exclusive right to buy at a fixed price within a set window, and can walk away without buying anything. This one gives a developer 18 months over a 3.4 hectare block at Woodford for $25,000, at a fixed price of $1,400,000.

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Option to purchase · Lot 14 on RP 88213 · Option OP-2028-02Page 1 of 5
Option to purchase · Lot 14 on RP 88213 · Option OP-2028-02Page 2 of 5
Option to purchase · Lot 14 on RP 88213 · Option OP-2028-02Page 3 of 5
Option to purchase · Lot 14 on RP 88213 · Option OP-2028-02Page 4 of 5
Option to purchase · Lot 14 on RP 88213 · Option OP-2028-02Page 5 of 5
Option to purchase agreement

Made on 18 February 2028 between Merideth Callow of 88 Ferny Creek Road, Woodford QLD 4514, called the Grantor, and Kestrel Ridge Developments Pty Ltd, ACN 641 220 887, of Level 2, 14 Bowen Street, Caboolture QLD 4510, called the Grantee.

$25,000
Option fee
$1.4M
Purchase price
18 months
Option period
60 days
Settlement
1. The land
1.1
What the option is over
The whole of the land described below, together with the farmhouse, two sheds and the bore on it. The Grantor holds clear title and has told the Grantee of every encumbrance affecting the land, which are the ones listed in the table.
Detail
Description
Property
88 Ferny Creek Road, Woodford QLD 4514
Title
Lot 14 on RP 88213, County of Canning, Parish of Durundur
Area
3.4 hectares
Zoning
Rural residential, as at the date of this agreement
Encumbrances
An electricity easement along the western boundary
2. The option
2.1
What is granted
The Grantor grants the Grantee the sole right to buy the land at the price in clause 4.1 by giving an exercise notice during the option period. The Grantee is not obliged to buy, and that is the whole point of an option: the Grantee is buying time and certainty, not the land.
2.2
The option fee
The Grantee pays $25,000 to the Grantor on the day this agreement is signed. The fee is not refundable in any circumstance, including if the option lapses. If the option is exercised, the fee counts toward the deposit under clause 4.2.
2.3
The option period
The option period runs for 18 months from 1 March 2028 to 5 pm on 31 August 2029. Time is of the essence. The option lapses at the end of that period and cannot be revived by agreement to extend that is not in writing and signed by both parties.
Date
What happens
Whose step
18 February 2028
Option signed, option fee of $25,000 paid
Both
1 March 2028
Option period starts, access for investigations begins
Grantee
By 28 February 2029
Development application lodged, if the Grantee proceeds
Grantee
By 5 pm 31 August 2029
Exercise notice and deposit balance, or the option lapses
Grantee
60 days after exercise
Settlement under the annexed contract
Both
3. Exercising the option
3.1
How to exercise
The Grantee exercises the option by giving the Grantor a written exercise notice in the form below, together with two counterparts of the contract of sale annexed to this agreement signed by the Grantee, and payment of the balance of the deposit.
Form of exercise notice
To
Merideth Callow, 88 Ferny Creek Road, Woodford QLD 4514
From
Kestrel Ridge Developments Pty Ltd, ACN 641 220 887
Option
Option to purchase dated 18 February 2028, reference OP-2028-02
Notice
The Grantee exercises the option to purchase Lot 14 on RP 88213
Enclosed
Two signed counterparts of the contract, and the deposit balance
Signed and dated
By a director of the Grantee, on the date of the notice
Form of exercise notice
To
Merideth Callow, 88 Ferny Creek Road, Woodford QLD 4514
From
Kestrel Ridge Developments Pty Ltd, ACN 641 220 887
Option
Option to purchase dated 18 February 2028, reference OP-2028-02
Notice
The Grantee exercises the option to purchase Lot 14 on RP 88213
Enclosed
Two signed counterparts of the contract, and the deposit balance
Signed and dated
By a director of the Grantee, on the date of the notice
Form of exercise notice
To
Merideth Callow, 88 Ferny Creek Road, Woodford QLD 4514
From
Kestrel Ridge Developments Pty Ltd, ACN 641 220 887
Option
Option to purchase dated 18 February 2028, reference OP-2028-02
Notice
The Grantee exercises the option to purchase Lot 14 on RP 88213
Enclosed
Two signed counterparts of the contract, and the deposit balance
Signed and dated
By a director of the Grantee, on the date of the notice
3.2
What happens next
The Grantor signs both counterparts within five business days and returns one to the Grantee, and a binding contract of sale exists from the date of the exercise notice, not from the date the Grantor signs. Settlement is 60 days after that date.
3.3
A notice with a small defect
A notice that is given in time and makes the Grantee’s intention clear is effective even if it contains a minor error, and the Grantee may correct the error within five business days. A notice given after 5 pm on the last day is not effective, however clear it is.
4. Price, deposit and GST
4.1
Purchase price and deposit
The price is $1,400,000, fixed for the whole option period and unaffected by the market, by valuations or by any development approval the Grantee obtains. The deposit is 10 per cent of the price, being $140,000, and the option fee of $25,000 counts toward it, so $115,000 is payable with the exercise notice and is held in the deposit holder’s trust account until settlement.
4.2
GST
The Grantor is registered for GST and the parties agree that the margin scheme applies to the sale, which is recorded in the annexed contract. The option fee is inclusive of any GST payable on the grant of the option.
4.3
Adjustments at settlement
Council rates, water charges and land tax are adjusted at settlement on the usual basis, with the Grantor responsible up to and including the settlement day. The Grantor keeps any agistment income earned before settlement and no adjustment is made for it.
5. During the option period
5.1
The Grantor does not deal with the land
The Grantor will not sell, offer to sell, grant another option, lease for more than six months, mortgage further or grant any new easement over the land without the Grantee’s written consent. The Grantor may keep grazing the land as it does now.
5.2
Access and the development application
The Grantee may enter the land on 48 hours notice for surveys, soil tests and photographs, at its own risk and cost, and makes good any damage. The Grantor signs any owner’s consent the Grantee needs for a development application within five business days, at the Grantee’s cost.
5.3
Notices the Grantor receives
The Grantor gives the Grantee a copy of any notice, order or proposal affecting the land within five business days of receiving it, including anything from the council, the water authority or the electricity distributor.
6. What the Grantor promises
6.1
Title and disclosure
The Grantor warrants that it is the registered owner of the land, that it has disclosed every easement, covenant, lease and licence affecting it, and that it knows of no notice, order or proposal affecting the land that it has not given the Grantee a copy of.
6.2
The state of the land at settlement
The land is handed over at settlement in the condition it is in today, fair wear excepted, with the farmhouse and sheds standing, the bore working and vacant possession given. The Grantor does not remove fixtures, fell mature trees or excavate without the Grantee’s written consent.
7. Caveat, lapse and general
7.1
Caveat
The Grantee may lodge a caveat over the land to protect the interest this option gives it, and the Grantor consents to that caveat. The Grantee withdraws the caveat within 10 business days of the option lapsing, and if it does not, the Grantor may withdraw it and recover the cost.
What the caveat does, and what it does not do
A caveat records the Grantee’s interest on the title so the land cannot be dealt with behind its back. It does not give the Grantee possession, it does not stop the Grantor living there, and it is withdrawn as soon as the option ends.
7.2
If the option is not exercised
The option simply ends. The Grantor keeps the option fee, the Grantee has no claim on the land and no claim for what it spent on investigations, and each party bears its own costs. Nothing stops the parties agreeing a fresh option on new terms.
7.3
Assignment, costs and law
The Grantee may assign this option to a related body corporate on written notice, and otherwise only with the Grantor’s consent, which is not unreasonably withheld. The Grantee pays the Grantor’s legal costs of preparing this agreement, agreed at $2,200. The law of Queensland applies.
Grantor, Merideth Callow
Name
:
Date
:
For Kestrel Ridge Developments Pty Ltd
Name
:
Position
:
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Parties and option summary
The grantor and grantee, and a stats strip with the fee, price, window and settlement.
1. The land
What the option covers, and a table of property, title, area, zoning and encumbrances.
2. The option
The grant, the non refundable fee, the 18 month period and a key dates table.
3. Exercising the option
How to exercise, the form of notice, what follows, and a notice with a small defect.
4. Price, deposit and GST
The fixed price, the deposit with the fee credited, the margin scheme and adjustments.
5. During the option period
No dealings by the grantor, access for investigations, and notices received about the land.
6. What the Grantor promises
Title and disclosure warranties, and the state of the land at settlement.
7. Caveat, lapse and general
The caveat and its withdrawal, what happens on lapse, assignment and costs.

Clauses in this document

How to adapt this agreement

For a put and call option, add the call side so the grantor can also require the grantee to buy, and expect the fee and the drafting to change. For a shorter due diligence option, cut the window to six months and drop the development application clauses, since nobody lodges one in that time. For an option where the price should move with the market, replace the fixed price with a valuation mechanism and name the valuer's appointment path, because an option with no price and no mechanism is usually unenforceable.

Which law the terms follow

The agreement is governed by the law of Queensland, where the land sits, and the contract of sale annexed to it is the one that completes. The parties agree the margin scheme applies to the sale and record that in the annexed contract, and the option fee is stated as inclusive of any GST on the grant of the option itself. Rates, water and land tax are adjusted at settlement on the usual basis.

What makes this document work

The exercise notice is reproduced, not just described

Clause 3.1 is followed by the notice itself as six labelled rows: to, from, the option reference, the words that exercise it, what is enclosed and who signs. A grantee copying those rows on the last day of the window cannot get the form wrong, which is where option disputes usually start.

Every number reconciles across the document

The fee is $25,000, the price $1,400,000, the deposit 10 per cent at $140,000, and because the fee counts toward it, $115,000 is payable with the notice. The key dates table then ties those figures to 1 March 2028, 31 August 2029 and settlement 60 days later.

The caveat clause says what a caveat does not do

The grantor consents to a caveat and the grantee must withdraw it within 10 business days of lapse. A callout adds the part people argue about: a caveat protects the interest on the title, it does not give possession, and it does not stop the grantor living on the land.

Questions people ask

What is an option to purchase agreement?

A contract where a landowner gives someone the exclusive right to buy at an agreed price within a set period. The buyer pays a fee for that right and is never obliged to buy. If the option is exercised, a contract of sale comes into existence on the terms annexed to the option.

Is the option fee refundable?

Not in this agreement. The $25,000 is paid on signing and is not refundable in any circumstance, including if the option lapses. If the option is exercised it counts toward the 10 per cent deposit, so the grantee pays $115,000 with the exercise notice rather than the full $140,000.

How do you exercise an option to purchase?

By giving the written notice in the form set out in the agreement, before 5 pm on the last day, with two signed counterparts of the annexed contract and the balance of the deposit. A binding contract exists from the date of that notice, not from the date the grantor countersigns it.

Can the buyer lodge a caveat during the option period?

Yes. Clause 7.1 records the grantor's consent to a caveat protecting the interest the option creates, and requires the grantee to withdraw it within 10 business days of the option lapsing. If it is not withdrawn, the grantor may withdraw it and recover the cost of doing so.

What can the landowner do during the option period?

Keep using the land as it is now, which here means grazing. The grantor cannot sell, grant another option, lease for more than six months, mortgage further or grant a new easement without consent, and must pass on any council or authority notice within five business days of receiving it.

What happens if the option is not exercised?

It simply ends. The grantor keeps the fee, the grantee has no claim on the land and no claim for what it spent on surveys or a development application, and each side bears its own costs. The caveat comes off and the parties are free to negotiate a fresh option.

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Sources

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