We regularly see contracts where the buyer wishes to change the name of the buyer after the contract has been entered into. Examples of this include the buyer wanting to purchase in the name of a company or trust instead of an individual or the buyer wants to remove or add the name of his/her spouse/partner.
Reasons for this can include a change of heart, subsequent consultation with an accountant or the requirement of a bank. Sometimes a change of buyer is beyond the control of the buyer (e.g. it is a requirement of the bank) but often it is due to the buyer rushing into a contract without thinking through who the buyer should be.
Whatever the reason, buyers need to understand two things. Firstly, it is normally the case that a seller is under no obligation to agree to a change of name and a buyer could be stuck with the original buyer named in the contract. Secondly, if a seller does agree to change of name then it will generally come at a cost. This is because a change of name must be dealt with by way of a Deed of Rescission and new contract in order to avoid double stamp duty being payable. The cost of these additional documents will generally be paid for by the buyer.
Crossing out the name of a buyer or adding the name of a buyer in the original contract should not be done because of the double stamp duty issue mentioned above.
On the topic of names in a contract, we have mentioned in a previous article that we often see the name of a trust stipulated as the buyer e.g. The Smith Family Trust. The trust itself is not a legal entity. Therefore, the name of the trustee (be it a corporate trustee or an individual trustee) needs to be stipulated e.g. ABC Pty Ltd as trustee for The Smith Family Trust or John Smith as trustee for The Smith Family Trust.
As a result, buyers need to think carefully about who they want the buyer to be and to ensure that the correct and full name of the buyer is inserted in the contract.
This update is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.