Nominations in Real Estate
Sometimes people who purchase a property are unable to attend at the signing of a contract. Or, sometimes only one member of the purchasing party is on hand for the signing. Or even sometimes they wish to nominate their super fund or company as the purchaser, down the track.
This is particularly so when a purchaser’s advocate is employed to negotiate the purchase of a property, with the view to nominating the actual purchaser, or purchasers, at a later date. In these instances the nomination takes place in what could be described as ‘innocuous circumstances’, in that the purchaser is not seeking to gain a profit, they simply want to adjust the purchase to better suit their purpose.
These nominations are done via way of ’nomination documents’ which are prepared by the purchaser’s solicitor, or conveyancer, and signed by both parties involved in the s ale of the property. It is the responsibility of the nominated purchaser to satisfy the State Revenue Office, by statutory declaration, that no additional stamp duty is payable.
There has always been a Common Law right to nominate independent of any contractual right. These rights exist in tandem, and either may be relied upon. A purchaser remains liable under a nominated contract, the nominee merely being permitted to exercise the purchaser’s rights. An ‘assigned contract’ results in the nomine standing in the place of the purchaser, and signs the contract.
A nomination does not require a new contract, unless the purchaser is relying on a contractual right, and the contract conditions requires one.
With nominations, the vendor can enforce the contract against the original purchaser. Any notice of default must be served on the purchaser. In practice, it may actually be served on both the original purchaser and the nominated purchaser.
Some contracts have purported by way of special conditions inserted into the contract, that the vendor will charge legal costs to a purchaser if there is a nomination. This is, in fact, unenforceable under s42(3) of the Property Law Act.