A Put and Call Option is an agreement, usually between a
landowner and a Builder. The agreement allows the landowner to
allocate certain blocks to the Builder for their exclusive right to
sell to third parties, for an 'option fee'.
The benefit to the landowner is that they have a guaranteed sale
because even if the Builder doesn't find a third party, the
'put' option allows them to make the Builder purchase the
lot. The benefit to the Builder is that they get to package the
land up as a house and land package, guaranteeing their build on
that block of land. The risk to the Builder is that if they do not
find a third party to purchase the block of land, they are required
to.
There is also such thing as just a Call Option. The difference
here is that the landowner no longer has the option to require the
Builder purchase the lot however if the Builder doesn't
nominate a third party to purchase the lot, they may forfeit their
option fee.
