Just because you know you want to buy a property, doesn’t always mean you know HOW
Just because you know you want to buy a property, doesn’t always mean you know HOW you want to buy a property - i.e. in a personal name, in one or more names or even under a company. Now it might seem straightforward (after all, you know there is a buyer at least) but its the detail (specifically the time it takes to cover the detail) that can sometimes derail a deal.
To get around the need for upfront certainty, it wasn't uncommon (not that long ago) for buyers to cover themselves with the phrase “and/or nominee” under the buying entity. “I’ll put it in my name and sign for now, but we might change it later” being the explanation as contracts were quickly signed to lock in terms before then seeking legal/financial/spousal advice to make sure everything was as it should.
Now given the terms don’t change - the same amount of money is paid, the timeframe stays the same etc., you might think a simple name change would have little impact, so why not do it? Well, there are a few good reasons, and ignoring them can get expensive, fast.
For the seller, a change of entity can mess with a few things, but the most important is a buyer’s finance condition (if they have one). You have gone from the person buying applying for finance, to now that condition connected to someone (or something) else over which you don’t have control. If its changed to a company name, that company might not have traded for long enough to appeal to most lenders, running a greater risk of knockback at the bank and an exit without penalty for the buyer.
For the buyer, a seemingly innocent change can potentially bring with it additional stamp duty as the ATO considers the interest in the property to have changed hands multiple times within the same deal. I.e. you might have to pay stamp duty as the original buyer, but then do it again later. Stamp duty can be eye wateringly painful as it is - let alone being stung twice!
So what can you do to get around it? Well, the easy option is to not sign anything (and run the risk of missing out), but in practical terms, if you think you may need to change something after the fact, talk to the seller about it upfront. Clear communication around these kinds of changes provide a great chance to clear the air, terminate the original contract but then move forward with more certainty for everyone. Done properly, you can avoid penalty, juggle the best position for all parties and hopefully get that magic of outcomes - a win on both sides.