When entering into a Contract in Queensland, it is critical the Buyer’s and Seller’s names are complete, and correctly spelt. Any omissions or errors can cause significant headaches and incur significant cost further on in the conveyancing process.
The Seller is the first party listed on the Contract. The Seller’s details are the easiest to get right, as these must exactly match the title of the property (which can be discovered from a title search of the property, which your agent or solicitor can conduct before the Contract is signed). If, for some reason, you are selling the property and the entity registered on the title is incorrect (say, for example, the title is registered in the joint name of two people, one of whom is deceased), please speak to your solicitor before the Contract is signed about the Seller’s name that should be reflected on the Contract, and any special conditions that must be inserted to address the variation between the Seller’s name on the Contract, and the name registered on the title of the property.
It gets a bit trickier when inserting the name of the Buyer. If you are purchasing the property in your individual name, then your full legal name must be inserted (no nicknames, assumed names, or initials). If the purchaser is a Company, the full company name and A.C.N. of the Company must be inserted (e.g. SMITH NOMINEES PTY LTD A.C.N. 123 456 789). If you are purchasing the property as Trustee, then the full name of the Trustee and Trust must be entered (e.g. SMITH NOMINEES PTY LTD A.C.N. 123 456 789 AS TRUSTEE FOR THE SMITH FAMILY TRUST).
Firstly, if you sign a Contract that does not reflect the correct entity, leading to a change of the Contract, the Office of State Revenue may determine that any variation to the Contract to change the entity is a separate transaction, and may impose Transfer Duty on both the transfer reflected by the Contract, and the subsequent transfer to the correct Buyer. At a minimum, your solicitor will need to make additional submissions to the OSR to enable a cancellation of the incorrect Contract – and generally you will have to pay the Seller’s solicitor fees as well.
For example, Mr Bob Jones sells his property to Mr John Smith, and an unconditional Contract is executed indicating these names (and Mr Smith does not provide any instructions to his solicitor indicating that the Buyer is a company or trust) (this is Transaction One). One week before settlement, Mr Smith’s bank observes that the transfer documents do not indicate the name of the Trust purchasing the property. Further discussion with Mr Smith reveals that he did indeed intend to purchase the property as Trustee, and didn’t realise that his solicitor needed to know this. His solicitor approached the Seller’s solicitor, who agreed that the Contract could be amended to reflect the Buyer as Trustee. However, Mr Smith signed the Contract in his own right, and then (it appears) decided that the purchaser would be the Trust. As the Contract signed is immediately unconditional, the Office of State Revenue can determine that the change of Buyer from Mr Smith to Mr Smith as Trustee is a second, and separately assessable, transaction (Transaction Two). Whilst the ultimate outcome is that both transactions are effected and the property is held in the name of the intended party (i.e. Mr Smith as Trustee), the effect of such a determination by the Office of State Revenue is that the respective Buyers have to pay transfer duty on each of the transactions – meaning that Mr Smith has to pay Transfer Duty on Transaction One, and Mr Smith as Trustee has to pay Transfer Duty on Transaction Two. The double-payment of Transfer Duty would be entirely avoidable had the correct purchasing entity been inserted in the Contract from the outset. Your lawyers may be in a position to apply for a cancellation of the first contract, nullifying Transaction One in terms of duties – but the process will incur additional costs – usually including costs payable to the Seller’s solicitor and the Buyer’s solicitor.
Secondly, indicating the correct entity on the Contract from the outset creates less potential for issues to arise as the transaction progresses. An incorrectly listed entity requires amendment on the Contract, which can be made only if both parties agree. It is also important to note that, if purchasing the property as Trustee of a Trust, a certified copy of the Trust Deed (and any variations) is required to be lodged with the Transfer documents after settlement. As you may not have these easily accessible, it is best to allow sufficient time to locate these documents prior to settlement in order to avoid a last minute rush.