The Cost of Changing a Name On A Contract

[Hysteria]

After some advice on this situation..

I placed a property under contract in my own personal name 2 weeks ago. The following day I let the conveyancer know of the name change as I changed from my personal name to a company/trust set up.

3pm Friday after noon (11 days later) I get a phone call from their solicitor telling me the only way I can change the name on the contract is by "Deed of Rescission" or by tearing up the old contract and getting the real estate agent to draw up a new contract with the new name and having both parties sign.

The real estate agent said he would have been happy to do this except that the seller has left for Bali for holidays and doesn't want to bother him.

I was told the deed of rescission will cost between $150 and $550.
The property hasn't gone unconditional yet.

I am a bit annoyed that it was left so late to advise me on what was required with changing the name as I did have prior opportunity to have a new contract drawn up at no cost. It seems they have missed this till the last minute. Paying $150 isn't so bad but if it is $550 it seems to much.

What's your thoughts on this, suck it up and pay, or try to put it back onto the conveyancer ?

Cheers

 

[DaveM]

Sounds like your conveyancer or their soli didnt action your request. Id push back on them to sort it at their cost

 

[Terry_w]

Get legal advice. What are the stamp duty implications and asset protection implications - signed in your name, but now substituting a trust will weaken any asset protection.

If the seller is in Bali how is he going to enter a new contract? He will have to be bothered.

And if the contract is not unconditional then why would you need a deed of recission? You could just withdraw your offer and the trustee make a new offer.

Hope you are not taking advice from a non lawyer.

 

[Hysteria]

That's what I was thinking Dave M

Not sure of the Implications Terry W. How will this effect anything? It is a completely new company and trust by the way. If I withdraw the offer can the seller sell to another party?
They are a law firm/conveyancing company but seems like they didn't act on my original request until the last minute.

 

[Terry_w]

That's what I was thinking Dave M

Not sure of the Implications Terry W. How will this effect anything? It is a completely new company and trust by the way. If I withdraw the offer can the seller sell to another party?
They are a law firm/conveyancing company but seems like they didn't act on my original request until the last minute.

If you withdraw they can sell to anyone.

Asset protection is weakend, because you have entered a contract but the trustee may complete the purchase so there are various arguements that could be used to say the property that your's. Have you sought legal advice on this side of the transaction? Consider the deposit too. Has that been paid, and how will the trust pay it if you pull out?

 

[Hysteria]

If you withdraw they can sell to anyone.

Asset protection is weakend, because you have entered a contract but the trustee may complete the purchase so there are various arguements that could be used to say the property that your's. Have you sought legal advice on this side of the transaction? Consider the deposit too. Has that been paid, and how will the trust pay it if you pull out?

That's what I thought if I withdraw and just get a new contract drawn up then it on the market again.
I received the phone call Friday afternoon, its a long weekend up so will look into some legal advice. As I was just going on their advice and thought it would be a simple fix. Its not my field so I don't know.
$1000 deposit paid....is this much of a problem...again I leave this to the experts. But looks like this can go wrong as well.

Cheers

 

[Terry_w]

Best to get the deposit back and have the trust pay its own deposit.

 

[Hysteria]

Nice one Terry, was glad you chimed in on this one.

Trusts, companies, paperwork!! All this on a Friday arvo....and the long weekend too... Just needed the right advice.
Will update the outcome.
Cheers

 

[cu@thetop]

After some advice on this situation..

I placed a property under contract in my own personal name 2 weeks ago. The following day I let the conveyancer know of the name change as I changed from my personal name to a company/trust set up.

3pm Friday after noon (11 days later) I get a phone call from their solicitor telling me the only way I can change the name on the contract is by "Deed of Rescission" or by tearing up the old contract and getting the real estate agent to draw up a new contract with the new name and having both parties sign.

The real estate agent said he would have been happy to do this except that the seller has left for Bali for holidays and doesn't want to bother him.

I was told the deed of rescission will cost between $150 and $550.
The property hasn't gone unconditional yet.

I am a bit annoyed that it was left so late to advise me on what was required with changing the name as I did have prior opportunity to have a new contract drawn up at no cost. It seems they have missed this till the last minute. Paying $150 isn't so bad but if it is $550 it seems to much.

What's your thoughts on this, suck it up and pay, or try to put it back onto the conveyancer ?

Cheers

My 2 cents worth:
1. You should speak to your accountant before buying anything. You would not now be in this pickle.
2. Deed of rescission is standard and pricing seems right.
3.Not the soli's fault you are changing horses half way through the transaction. In fact the seller can refuse your request.
4. Failure to go with the deed means you may lose the deal or be up for double duty.
5. No a good idea to cancel a contract in qld as the REIQ standard terms and conditions will make you liable for a number of consequential losses.
6. If you enter a purchase contract before the new trust is established you may find stamp duty issues will give you grief.
7. Make sure the deposit on the trust purchase is traceable to the trust.


As a solicitor I love how people always look to blame the solicitor.

Accept responsibility for your initial oversight and move on. Trying to load up blame where it is not due will alienate your legal team.

 

[antistar]

slightly unrelated but I thought I ask:
Is there any danger of stamp duty issues if contract is in a company name and company share ownership changes between contract date and settlement date?

 

[Terry_w]

slightly unrelated but I thought I ask:
Is there any danger of stamp duty issues if contract is in a company name and company share ownership changes between contract date and settlement date?

depends on the state. In NSW duty of 0.6% on the value of shares. Off the top of my head I don't think the shares would be valued by the inclusion of the property until settlement, but I would have to check the wording of the duties act.

 

[JDM]

After some advice on this situation..

I placed a property under contract in my own personal name 2 weeks ago. The following day I let the conveyancer know of the name change as I changed from my personal name to a company/trust set up.

3pm Friday after noon (11 days later) I get a phone call from their solicitor telling me the only way I can change the name on the contract is by "Deed of Rescission" or by tearing up the old contract and getting the real estate agent to draw up a new contract with the new name and having both parties sign.

The real estate agent said he would have been happy to do this except that the seller has left for Bali for holidays and doesn't want to bother him.

I was told the deed of rescission will cost between $150 and $550.
The property hasn't gone unconditional yet.

I am a bit annoyed that it was left so late to advise me on what was required with changing the name as I did have prior opportunity to have a new contract drawn up at no cost. It seems they have missed this till the last minute. Paying $150 isn't so bad but if it is $550 it seems to much.

What's your thoughts on this, suck it up and pay, or try to put it back onto the conveyancer ?

Cheers

If the contract is conditional and you have valid grounds to terminate, termination and entry into a new contract with the correct entity will be the cheapest and easiest way to go. Note that this does not include terminating under a finance condition where you have made no effort to obtain finance.

The cost of the rescission (even at $550) is very reasonable and much cheaper than most firms. Would you rather pay $550 or pay transfer duty twice?

Ultimately, you should have structured your purchase correctly in the first instance if you didn't want the cost of a rescission and entry into new contracts. This is not the fault of the agent or lawyer.

slightly unrelated but I thought I ask:
Is there any danger of stamp duty issues if contract is in a company name and company share ownership changes between contract date and settlement date?

Interesting question and the answer in Queensland is yes, there is a danger. Duty may arise if it is a land rich corporation. You can find more information here: https://www.osr.qld.gov.au/historical-information/information-bul/duties/land-rich-duty.shtml.

 

[lizzie]

I never have - and never will - understand this reluctance to pay a small amount (like $550) to ensure the correct purchase structure of an asset worth 1,000x more.

With a recent purchase we wanted two contracts - the business side of the asset purchased separately than the physical side of the asset ... vendor didn't want to pay for two contracts to be issued, so we forked out a tad over $1,000 to make sure everything was done above board and in the proper structure ... peanuts in the totality of things really.