This article was written by Nancy Wang Principal Solicitor at W & G Lawyers.
Options to purchase land are common — in family arrangements, leases, development deals and succession planning. They can be extremely valuable, especially where the price is fixed and the market has since moved. But they are also unforgiving. A recent Queensland Supreme Court decision shows how a buyer with a very valuable option lost it completely, not by missing a deadline, but by exercising the option in the wrong way.
What an option actually is
An option to purchase is, in effect, a standing offer that the seller cannot withdraw for a set period. It becomes a binding contract only if the holder accepts it strictly on the terms set out in the option. That last point is the trap. To take up the option, you must accept it — clearly, unconditionally, and exactly as written. Anything that adds new terms, or leaves you a way out, is not an acceptance at all.
The case: a “subject to finance” exercise
In Handford v Handford [2026] QSC 111, a family dispute over rural land had been resolved years earlier by a consent order. That order gave one family member, Darryl, an option to buy a property at a fixed price — roughly $1,000 per acre, about $882,000 — if certain events occurred, such as the death or incapacity of the older couple who owned it. When those events happened, he was given 30 days to exercise the option. The property was later valued at between $3.75 million and $4.15 million, so the option was worth a great deal.
He responded quickly. His solicitors wrote to exercise the option — but “on the following basis”: that a contract would be prepared, for his approval, that was subject to finance within 21 days, subject to the title being transferred into the sellers’ names, and to settle 28 days after that. In other words, the exercise came bundled with conditions.
The Court held that this was not a valid exercise. A valid exercise must be clear, unequivocal and unconditional, and does not require a contract at all — let alone one carrying conditions. The most damaging term was “subject to finance,” because it reserved to the buyer a right to walk away if finance could not be arranged. That left his commitment hanging on a future event rather than being final. In law, that is not an acceptance — it is a counteroffer, a proposal to deal on different terms. The other side never accepted it, so the option was never validly exercised, and when the 30 days ran out it lapsed for good.
What the buyer should have done
The judge spelled out two simple paths that would have worked. The buyer’s solicitors could have written that their client elects to exercise the option — nothing more. Or they could have elected to exercise the option and merely suggested a standard contract with proposed terms, as a matter of working out the mechanics, without making those terms conditions of the exercise. The fatal mistake was turning suggested machinery into preconditions that let the buyer escape.
The buyer also relied on an older High Court case (Oliver v Oliver (1958) 99 CLR 20, per Dixon CJ) where a mention of finance was treated as harmless because it only fixed when the price would be paid. The Court accepted that a finance reference is not always fatal — but drew a sharp line. A reference that only sets the timing of payment may be fine; a condition that gives the buyer a right to pull out is different in kind, and fatal.
There is a striking footnote to the case. Even after the dispute began, the sellers’ side twice offered to sell at the fixed option price. The buyer did not complete. By fighting over whether his original notice was valid, rather than simply completing the purchase when he had the chance, he ended up with nothing — losing the right to buy a property worth around $4 million for a fraction of its value.
The practical lessons
Exercising an option is not the time to negotiate. The notice should do one thing: accept the option on its existing terms. The moment it asks for finance, due diligence, building and pest, or any other condition, it risks being treated as a counteroffer.
A finance condition is especially dangerous. There is a difference between saying when you will pay and reserving a right to withdraw if your loan falls through. The first may survive; the second usually will not.
If you need a finance clause, build it in at the start. The time to negotiate conditions is when the option is granted, not when you come to exercise it. If the protection is written into the option itself, exercising on those terms is proper compliance.
There is rarely a second chance. A defective exercise is a counteroffer the other side can simply reject, while the clock keeps ticking. Once the exercise period ends, the option is usually lost.
Don’t let the argument swallow the deal. If a workable path to completing the purchase is offered, weigh it carefully. Winning a point about validity is no comfort if you lose the property.
Follow the mechanics to the letter. Check exactly how the option says it must be exercised — the form, who it goes to, how it is served, and the deadline — and comply precisely.
How W & G Lawyers can help
Whether you hold an option you want to exercise, or you are granting one to someone else, getting the wording right is what protects the deal. W & G Lawyers can review an option before you act and prepare a clean, compliant notice that exercises it without putting your right at risk — and, on the other side, advise grantors faced with a conditional or defective exercise. If you need finance, due diligence or other protections, we can build them into the option at the outset, so that exercising on those terms still counts as strict compliance. If an option deadline is approaching, the worst time to find out the notice was wrong is after it has lapsed. Contact us for a confidential discussion before you sign or serve.
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Disclaimer
This article is general information only and does not constitute legal advice under Australian law. For advice specific to your situation, please contact W & G Lawyers. For further details, please click here to view our disclaimer.