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The Conveyancing and Real Property Amendment Bill 2025 (Bill), which became law on 15 August 2025, amends the Conveyancing Act 1919 (Act) and Real Property Act 1900 by clarifying the application of cooling off rights and disclosure obligations relating to put option agreements, putting an end to four years of legal and commercial uncertainty raised by the decision in BP7 Pty Ltd v Gavancrop [2021].
Exposing a Legislative Gap - BP7 Pty Ltd v Gavancorp [2021]
A group of landowners entered into put-and-call option agreements with BP7 Pty Ltd (the developer) for 14 residential strata lots in Cronulla, NSW. The landowners exercised their put options, triggering the sale contracts, meaning the developer was required to purchase the property. However, the developer sought to rescind the contracts within the five business day cooling-off period under section 66U of the Act, despite that under section 66T(d) of the Act, there is no cooling off period in relation to a contract for the sale of residential property if the contract is made due to the exercise of an option. This raised the question of whether a put option is an "option" within the meaning of section 66T(d) of the Act.
At the time of the decision, the definition of "option" under the Act only included an "option to purchase residential property". The NSW Supreme Court interpreted the expression "option to purchase" to have its ordinary and natural meaning, i.e. that purchasers must have a choice to enter into the contract. Therefore, as purchasers under a put option agreement lack this element of choice (as a purchaser is effectively compelled to purchase), the put option did not fall under the definition and the developer was entitled to the cooling-off period and could rescind the contracts.
The decision went against the generally accepted practice in conveyancing at the time, namely that purchasers had no cooling off rights under contracts resulting from the exercise of options. It meant purchasers in similar arrangements potentially had the right to rescind contracts pursuant to the exercise of a put option, creating unexpected exposure and concern for vendors and developers who relied on the certainty of exercising those options.
The key amendment
To resolve the uncertainty raised in Gavancorp, the Bill has introduced a new definition of "option" included in section 66P(1) of the Act which includes both options to purchase (call options) and operations to compel purchase (put options). This amendment has resulted in changes to the prescribed form of cooling off notice set out in Schedule 5 to the Conveyancing (Sale of Land) Regulation 2022 for all contracts of sale for residential property (and not just option agreements).
The amendment will also provide further legislative clarity by ensuring consistency regarding the required documents available to purchasers before entering into put or call options.
Other amendments
Other key amendments include:
- Confirmation, under Division 9 of Part 4 of the Act, that cooling off rights, along with the terms, conditions and warranties under the Conveyancing (Sale of Land) Regulation 2022 apply to options as defined in section 66P(1) of the Act.
- An increase to the number of positive covenants and
restrictions that, lodged with a plan, can be released through an
instrument under section 88B of the Act, including:
- Positive covenant for maintenance or repair created under section 88BA
- A restriction on the use of land imposed by a prescribed authority under section 88B or section 88E and
- A public positive covenant
What does this mean for you?
Whilst this Bill is now in effect, transitional provisions apply so that a contract or option can include either the old or new form of cooling off notice up until31 May 2026. However, contracts exchanged on and from 1 June 2026 onwards must include the required cooling off notice as amended by the Bill.
If you have any concerns about how this new reform may impact your current or future property law arrangements, please contact our property law team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
