A recent settlement has highlighted the need to be clear on the buyer’s details before signing the Offer and Acceptance – or risk paying double stamp duty.
Mr Townsend (name changed) recently made an Offer on a property as trustee for his family’s super fund, which was promptly accepted by the seller.
After the contract had been lodged with the Office of State Revenue, Mr Townsend’s agent submitted a contract variation requesting the Offer and Acceptance be changed from Mr Townsend’s name to Townsend Pty Ltd – a change advised by Mr Townsend’s accountant, for tax purposes.
Unfortunately for Mr Townsend, this wasn’t possible. While contract variations can be made to details such as settlement date or conditions, it is illegal to make a variation to the buyer’s details. The name written on the contract is final.
Subsequently, Mr Townsend has cancelled the old contract (through mutual agreement), completed a new Offer and Acceptance with the modified details, and may face having to pay double the original stamp duty – one lot for each contract.
For such a seemingly small change, the consequences are huge.
If you’re approached to write up a contract for a client acting as a trustee for a family trust or superannuation fund, advise your client to seek financial advice first. A trip to an accountant is well worth avoiding trouble during settlement.
Image by Robert S Donovan via Flickr.