Standard form contracts for the sale of land in Victoria include a condition giving the purchaser the right to nominate. General condition 18 of the LIV contract expresses that right in very general terms, without limitation in relation to the form of the nomination or time for nomination. The common law also recognised a right to nominate independent of any contractual right.
These contractual and common law rights exist in tandem and either may be relied upon. Neither of these rights is dependent on the contract containing the words ‘and/or nominee’. It is not necessary to rely on the common law right if general condition 18 forms part of the contract, but the common law right could still be relied upon if general condition 18 were removed. The common law right may be limited or even excluded by the contract, but clear words would be necessary to do so.
A nomination is done by way of a nomination document, which is usually prepared by the purchaser’s solicitor or conveyancer for signing by the purchaser and nominee. A nomination does not require a new contract unless the purchaser is relying on a contractual right.
A nomination by the purchaser creates a second contract, between the purchaser and nominee. However, this is not a contract for the sale of land, rather it is an assignment of the purchaser’s rights under the contract of sale of land to the nominee.
The vendor is not a party to the nomination. As such, the vendor remains entitled to enforce the contract against the purchaser. The nomination acts as the purchaser’s authority to the vendor to transfer the property to the nominee in fulfilment of the vendor’s duties under the contract.
A nominee ordinarily has no right to enforce against the vendor, as the nominee is not a party to the contract. Only the purchaser may do so.
Whilst the nomination process is relatively simply, there may be significance stamp duty consequences associated with the nomination that must be carefully considered by the nominee.
We recommend that purchasers and nominee’s obtain legal advice about whether nominating or accepting a nomination is the right move.
For further information on nominations, please contact us at [email protected] or on 5303 0281.
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The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
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