Understanding the sale of real estate nomination form
Discover the significance of the sale of real estate nomination form and how it can benefit you. In certain situations, property purchasers have the option to nominate an alternative individual or entity to take over ownership of the property. This could be a family member, friend, or even a company acting as the nominated purchaser.
When would a contract purchaser use a sale of real estate nominate form?
There are several circumstances in which a property purchaser may choose to nominate an alternative purchaser:
- The nominated purchaser is unavailable during the offer stage or cannot attend the property auction.
- Multiple purchasers are involved, but only one party signs the contract of sale.
- The contract purchaser is unable to settle on the property, and only a nominated purchaser can provide the funds for the purchase.
How can a nomination clause be included in the contract of sale?
Incorporating a nomination clause into the contract of sale is a common practice. By adding the term “and/or nominee” after the purchaser’s name in the contract, the contract purchaser gains the ability to nominate a nominee purchaser by way of a sale of real estate nomination form.
The right to nominate is recognised in common law and is also contained with the general conditions of the Law Institute of Victoria (LIV) Contract of Sale. General Condition 4 of the LIV contract of sale states as follows:
“The purchaser may no later than 14 days before the due date for settlement nominate a substitute or additional person to take a transfer of the land, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract.”
Both the contractual and common law rights can be utilised for the nomination process, although the common law right may be excluded by the contract of sale.
Is a new contract of sale necessary?
The nomination process does not require a separate contract of sale. Instead, a sale of real estate nomination form is drafted and used to verify stamp duty with the State Revenue Office (SRO) and finalise the property transfer.
For an off-the-plan contract of sale, the purchaser’s solicitor typically prepares the sale of real estate nomination form.
When does nomination lead to double stamp duty?
Nomination generally does not lead to double duty, except in limited cases involving additional consideration or land development following a contract or option.
How do you prove that nomination has occurred?
Although a written sale of real estate nomination form is not required, a standard form is typically drafted for the purpose of the State Revenue Office (SRO). Additionally, a Statutory Declaration is necessary, which is commonly lodged with the transfer of land document as part of the Digital Duties Form
Can multiple nominations be made?
While there haven’t been cases specifically addressing multiple sale of real estate nomination forms or revoked sale of real estate nomination forms, there doesn’t appear to be any inherent limitations on exercising this right. It is the responsibility of the nominee to satisfy the State Revenue Office regarding the duty consequences of the nomination process.
Can a vendor charge a fee to approve a nomination?
According to section 42(3) of the Property Law Act 1958 (Vic), a vendor is prohibited from charging legal costs to the purchaser for finalising the sale of real estate nomination. Furthermore, they cannot include a special condition in the contract to enforce such a request.
How does nomination interplay with default?
The vendor can enforce the contract against the original purchaser, and any notice of default must be served on that purchaser. In practice, it may also be served on both the original purchaser and the nominee. However, a nominee typically does not have the right to enforce the contract against the vendor since they are not a party to the contract. Only the purchaser can do so.
What distinguishes nomination from assignment and novation?
Under a nominated contract, the purchaser remains liable, and the nominee is permitted to exercise the purchaser’s rights. In an assigned contract, the nominee takes the place of the purchaser. Novation, on the other hand, involves canceling the original contract and entering into a new contract between the vendor and the new purchaser.
Require assistance in drafting a standard sale of real estate nomination form? Contact our team on (03) 8590 8370 to obtain legal advice from our expert property lawyers and conveyancers. We are here to assist you with your property purchase or sale and ensure the validity of your sale of real estate nomination form.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
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Last updated: 7 December 2021 Article by: Halil Gokler
