Clarity Restored: NSW Reforms to Put Options in Property Law

In the move that brings long-awaited certainty to property transactions in New South Wales, the Conveyancing and Real Property Amendment Bill 2025 (NSW) has amended key definitions under the Conveyancing Act 1919 to clarify the legal treatment of put options.

The reform comes in response to industry concerns and judicial uncertainty in BP7 Pty Ltd v Gavancorp Pty Ltd (Gavancorp), which disrupted expectations around cooling off rights in option agreements.

Cooling off rights give the purchaser the right to cancel a contract. However, such rights did not previously apply to contracts arising from the exercise of option agreements.

Prior to the Gavancorp case, it was understood in general conveyancing practice that purchasers did not have cooling-off rights for contracts resulting from the exercise of either put or call options.

Background: Gavancorp Decision 

In Gavancorp, the Supreme Court of New South Wales held that put options did not fall within the statutory exemption for an “option to purchase” under section 66T of the Conveyancing Act 1919 (NSW).

Key Implications of the Decision:

• The developer/purchaser was entitled to a cooling-off period and could rescind the contract, even though the 14 vendors had exercised their put options.

• The ordinary and natural meaning must be given to them term “option to purchase”.

• Purchasers in put option agreements lacked a genuine choice to enter the contract, effectively compelling them to purchase rather than simply holding an option to purchase.

• Call options remain exempt from cooling-off rights.

• The decision created legal and commercial uncertainty, particularly for developers and vendors who rely on put and call option arrangements to structure transactions.

Legislative Response

The Conveyancing and Real Property Amendment Bill 2025 (NSW) directly addresses the decision in Gavancorp amending the definition of “option to purchase” to include both put and call options.

The amendment will ensure:

1. The cooling-off regime does not apply to option-based transactions that already provide sufficient time for due diligence.

2. Legislative clarity by making it mandatory for vendors to provide all prescribed disclosure documents to purchasers prior to entering into an option deed.

Conclusion

The Conveyancing and Real Property Amendment Bill 2025 (NSW) resolves the uncertainty created by the Gavancorp by confirming that both put and call options fall within the definition of “option to purchase”. By clarifying that the cooling-off regime does not apply and by reinforcing mandatory disclosure requirements, the reforms provide vendors and developers with greater confidence in structuring option-based transactions, while ensuring purchasers receive the necessary information upfront.

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