On occasion, when clients are unable to obtain finance for a property purchase on, their own they will look to add another party as a Buyer to the Contract so that the finance can be accepted.
While on the surface this might sound like a simple change to make, this action can be problematic. This is because, in this case, the Office of State Revenue can impose a double stamp duty assessment on the Contract.
This is as the changing of names on the contract is considered a second transaction on the same property. This problem intensifies if the Buyer doesn’t pay the stamp duty, the Office of State Revenue will look to the Seller for the outstanding amount.
If financing is unattainable in the single name, then the finance clause cannot be satisfied – we would recommend that the contract be terminated under this clause.
After the original contract is terminated, a fresh contract can then be prepared including the two purchasing parties to approve finance, with the cooling-off period waived, containing the same terms and conditions as the original contract.
We recommend that agents do not use and/or nominee on the contract. This too can cause issues with the Office of State Revenue, where the transaction may be seen to be two and double stamp duty may be charged. In this situation, it is also recommended that the contract be terminated if possible, or if mutually agreed by the Seller to enter a deed of rescission.
In Queensland, Stamp Duty on a new home is upwards of $10,000 – even greater for investments – so paying double stamp duty is an expensive alteration to your contract.
However, as these corrective actions will ultimately cost you more in legal fees, it is best that the buying entity is correct prior to signing the contract.
If you require any further information regarding contracts or purchasing property, contact our Conveyancing team at firstname.lastname@example.org or call our office on (07) 3345 4388.