Get the name right at the start

By Pamela Wardle, Legal Practitioner Director

Have you just signed a contract?  If so, who is actually entering into the transaction?

Individuals, companies, trusts and superannuation funds are all separate and individual entities at law even though the controlling person may be the same person (eg an individual may be the director of the company or the trustee of the trust or superannuation fund). 

If the wrong entity is noted on a contract:

1.       correcting the error may be costly or cause significant delays (which may cause you to breach the contract by not performing your obligations when due);

2.       the entity on the contract may not have the legal authority to deal with the property.  For example, if a property is owned by ABC Pty Ltd as trustee for the XYZ Family Trust, neither the company nor the individual directors have the legal authority to sell the property in their own right (ie to have their names on the contract); and

3.       the Office of State Revenue may view the arrangement as two separate transactions (eg the incorrect name purchases the property under the contract and then transfers the property to the correct name under the transfer) and you may need to pay double stamp duty. 

So to avoid confusion, delay and expense, be sure that your contract reflects the correct name before you sign.  If you are unsure about who should be the correct entity to the transaction contact your accountant or our office for advice specific to your circumstances.