Option contracts can exist over most assets, including land, money and shares. Our concern is one over land. It may be a call option where the buyer has a right (but not the obligation) to buy the land from the seller, or a put option where the seller has a right (but not the obligation) to sell the land to the buyer. So, in a call option the buyer has a choice whether to exercise the right and compel the seller to sell, or not. The reverse operates in a put option: the seller has a choice whether to exercise the right and compel the buyer to buy, or not. Call options over land are the more common so this paper will assume a call option.
A conditional sale agreement is a different legal creature from an option. In an option there is no agreement to buy and sell, but rather a promise that if (and only if) the option holder exercises the option, the parties will then agree to buy and sell.
In a conditional sale agreement there is agreement to buy and sell, albeit that the sale may yet be defeated if a condition is not fulfilled. In practice, professional investors and property developers may ask a landowner for a call option so they can plan ahead knowing that, if they exercise the option, they can buy the land. The landowner does not know however whether the option will be exercised.
An option to purchase is an agreement between parties that gives one party (the purchaser) the right to take up the option to purchase property, goods and/or land from the other party (the vendor) at any time within a specified period. The option to purchase requires the owner of the property etc to sell if and when the other party takes up the option to purchase. An option to purchase is not a conveyance or deed of purchase.
An option of first refusal gives the owner discretionary powers to sell providing the other party is given the first opportunity of accepting or refusing the offer. If the option to purchase affects Torrens Title land, the lodging party must be aware of the effect of registration in the General Register compared to a caveat recorded under the Real Property Act 1900.