Call options—protection against third parties
Call options—protection against third parties

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Call options—protection against third parties
  • Registered land
  • Unregistered land
  • Restrictions on dealings with the option land

A call option is (generally) an equitable interest in land and must be registered in order to bind successors in title of the land owner. The exception is where the option agreement is personal to the grantor. In such a case it is not an equitable interest and therefore need not be registered.

It is only the option agreement that has to be protected. It is not necessary to separately register the contract for sale that comes into being once the option is exercised.

Failure by the grantee's solicitor to register the benefit of the option is capable of constituting negligence actionable in both contract and tort.

Even if the option holder does not register the option and the landowner sells on to a third party, who is thus not bound by the option, the landowner will remain liable to the option holder under privity of contract. The usual remedy is damages. However, an award of specific performance has been made against a landowner who sold on to a subsidiary, where the option had not been protected by registration as a land charge, even though the sale to the subsidiary was not held to be a sham. While doubts have been expressed about the validity of this decision, the landowner shoul