Are you buying in the right name?
Before signing a Contract to purchase a residential property, make sure the correct name is listed. It is important that you consider the name(s) and/or the entity you want listed as the Buyer.
Often buyers will sign a Contract in a particular name, only to later discover the name needs to be changed.
Most commonly this occurs when a change of name is required for mortagage approval. A married couple who have both signed the Contract may find their bank requires only one name to be on the Contact.
A change of name may also be required to obtain certain tax benefits.
Double Stamp Duty
Once a Contract has been fully signed, a name cannot be added or removed from the Contract of Sale. This includes simply “crossing it out”. Amendments to the parties can lead to the Office of State Revenue viewing this as two separate transactions. Consequently, stamp duty may be charged for both – which is both costly and unnecessary!
To avoid this risk of double stamp duty a fresh contract with the correct names is required. You will need the consent of the seller to terminate the existing Contract and enter into a fresh Contract. This process involves the drafting of a Deed of Mutual Cancellation/Rescission. The Deed as well as the replacement Contract of Sale will need to be re-signed by everyone. As a result, these additional documents can lead to extra legal costs for the buyer. Delays to finalisation of the purchase may also be experienced if finance and settlement dates are not able to be met.
See your financial experts before signing
In order to avoid this unnecessary additional process, it is recommended that buyers always consult with their financier before signing a Contract of Sale to discuss how the Contract should be prepared in order to have the best chance of finance approval.
If a Buyer is purchasing for investment or business purposes, it is also always a good idea to speak with your accountant to ensure that the correct buying entity is used to maximise any financial or tax benefits.