CONTRACTS OF SALE - THE IMPORTANCE OF A NAME
You spend hours on end attending open homes, meeting with potential buyers, going through details such as marketing, advertising, expectations, costs and styling of homes with sellers. You are finally in a position to start preparing the contract of sale to quickly secure the potential buyers but sometimes, the simplest details are missed.
We all know the importance of getting the date, conditions, purchase price, lot, plan and address correct on a contract, but how important are the names? - extremely important.
In the conveyancing industry, one of the most common errors found on a contract of sale are the names, not just for the buyers but also the sellers.
Why is this important?
· To ensure the correct entities are selling or purchasing the property;
· Incorrect names for the buyers may delay finance applications and in turn impact the process of settlement; and
· Amending the names on a dated contract of sale (by way of correspondence/deed of variation or even deed of rescission) may give rise to additional stamp duty liability for the buyers and delay the process for settlement.
Common mistakes and how to avoid them
1. For sellers, we recommend copying the names of the sellers directly from the title search. Common mistakes we have noticed are:
· The seller’s maiden name is listed on the title but the seller’s married name is listed on the contract;
· The sellers are acting as trustee and the instrument number is not listed on the contract;
· The sellers are acting as personal representatives and the instrument number is not listed on the contract;
· There are two or more names listed on the title and only one name is listed on the contract;
· The seller’s middle names are missing; and
· The seller’s names have been misspelt.
2. For buyers (individuals), we recommend copying the full legal name of the individual from their passport or drivers licence. Common mistakes we have noticed are:
· The buyer’s middle names are missing;
· The buyer’s names have been misspelt;
· Nicknames have been used instead of actual names (e.g. Dan instead of Daniel); and
· Foreign names have been written with the buyers’ surname first. Although cultural awareness is important, the order of names listed on the contract should reflect ‘first name, middle name, surname’ to avoid confusion.
3. For buyers (companies), we recommend copying the full company name and ACN as listed on ASIC. Common mistakes we have noticed are:
· The company name is not transcribed correctly as per ASIC records (e.g. only noting “ABC & Co Company” instead of “ABC & Co Company Pty Ltd”);
· The company ACN has not been noted; and
· If the company is purchasing property under a trust, only the trust is listed. A trust is not an entity and therefore cannot purchase property. An example of what should be listed on the Contract is “ABC Pty Ltd as trustee for the ABC Family Trust”.
We encourage all agents to undertake a title search and obtain all necessary identifications from all parties before preparing the contract of sale to ensure all details are correct. A small step, that takes little to no time, will prevent headaches in the future.
We can provide pre-contractual advice to potential buyers and sellers before they sign the contract, this could save unnecessary delay, stress or costs in a property transaction.