Considering a Nominee Purchase

Hi All,

First timer here. Please bear with me. I am from Victoria.

I have been offered an OTP townhouse settling in June/July this year. The original contract has been signed by the purchaser back in 2016. The purchaser is happy for me to takeover the contract as a Nominee with 10% discount off the 2016 sale price.

I have bought numerous OTPs previously but never as a Nominee. I am also seeking legal advice.

However I wanted to ask those with the experience, what was the process that you have been through? Especially legally? Is there anything I need to be aware of or put in place to ensure I am covered legally and financially?

In terms of stamp duty, I read there have been recent changes. I was told by conveyancer that the stamp duty will be calculated based on the 2016 ruling, is this usually true? Also if I purchase it for 10% less, then how will my stamp duty be calculated?

Also is it better to use a conveyancer or a solicitor?

Thanks very much guys.

 

In that case you should speak to a lawyer.

 

@Honey85 Pretty much this. It can get complicated quickly and the general answers here might be wrong or misleading depending on the exact situation you're in.

And that's two lawyers here saying that.

 

Yes I am in touch with a lawyer.

I just wanted to get some real life experience from people who have done this before as part of my due diligence.

Thanks.

 

You will want to make sure that you will not become liable under the contract entered into by the vendor and the purchaser, make sure you get advice on whether there would be double duty, find out what happens if there is a dispute and it doesn't settle - unlikely you will have any recourse to the vendor. etc etc.

 

Thanks for taking the time to respond. Appreciate it.

 

has the original buyer already paid the 10% as a deposit?

 

Yes.

Say the original purchase price is $1m and he/she paid $100k for deposit. I have been offered to takeover the contract for $920k.

 

Usually the original contract has a deposit held in escrow, probably with the Vendor or Vendor's Agent. When you are taking over the contract via the nominee clause you assume the entire contract, usually including any deposit held in escrow. Normally a nominator would request deposit reimbursement (and usually an assignment fee) from any new purchaser in order to hand the contract over to a new buyer.

Depending on circumstances, if they are really desperate to get out of the deal, they may walk away from the deposit, they may in effect, discount the property 'up to' that deposit amount.

You are taking over the existing contract and will be paying stamp duty that is applicable on the original contract.

It's a perfectly legal method of acquisition and disposal of a property when under contract, but generally the original purchaser is not relieved of their duties to settle the transaction in case you default.

Just get legal advice, but nothing to fear provided you have done all your due diligence.

 

Sounds like an assignment rather than a nomination.

 

Thanks Knights. Appreciate your input.

 

Who may know more than a solicitor? Yeah

 

Ignoring the phase in...I wonder how GST for developer rules may affect this. The buyer must withhold GST...

 

I get the issue in a vacuum, however on a properly drafted contract a cheque will be drawn at settlement for the GST and retained by the seller as agent for the buyer.