You might have considered using the term, “and/or nominee” when buying property. Putting “Joe Bloggs and/or nominee” on the contract of sale generally means you can transfer the property from your name to another entity (eg. another person, business or trust) before settlement.
Why would you do it?
Generally for tax purposes. Your accountant might advise you that it makes better tax-sense to put the property in your spouse’s name, or in the name of your business or trust. It’s sort of like hedging your bets if you’re not sure which entity should buy the property at the crucial moment when you have to sign the contract.
The vendor (seller) has to agree of course. Both the vendor and the original purchaser have to sign the transfer document, which basically substitutes the purchaser. Typically there’s no problem getting the vendor to agree – they’re still getting paid.
But here’s the kicker – the entity you transfer to (the nominee) must be related to you. Otherwise you get hit with stamp duty twice.
Under the Duties Act, being “related” doesn’t just mean by blood or marriage. Yes, you could transfer to your spouse, de facto partner, sibling, parent or child without paying double stamp duty.
But a person and a company are also considered to be related; as long as the person is the majority shareholder or director of the company they’re transferring the property to (or vice versa).
The same goes for transferring between a person and a trustee, as long as the person is the beneficiary of the trust. Or between a private company and a trustee, as long as the company (or a majority shareholder or director of the company) is a beneficiary of the trust.
You can also nominate a company or trust that doesn’t yet exist.
But all of the parties have to be related. For example, if two people (x and y) jointly purchased a property using “and/or nominee” and then wanted to transfer it to x’s dad, they’d have to pay stamp duty twice because x’s dad and y aren’t related.
Something else to note is that the purchase price can’t change with the transfer. Otherwise it’s seen as the purchaser on-selling for a profit – that means double stamp duty.
And you should be aware of the dangers if the nominee doesn’t comply with the terms of the sale contract. A vendor will usually require that you, as the original purchaser, guarantee (on paper) that the nominee will comply with the terms. And you actually remain liable under the new nominated contract, meaning if the nominee breaches the terms, the vendor could come after you.
While there can be advantages to using “and/or nominee”, just be aware of the pitfalls.