Selling an off the plan property before settlement is also known as a nomination sale. At Crest Property Investments we help buyers sell their off the plan property before settlement. In this market insight we talk more about a nomination sale.
If you are in a situation where you need some assistance, please don’t hesitate to contact us. This video link to our Youtube channel also explains things in an audio version for your convenience.
Selling an off the plan property before settlement
Taking advantage of buying a property off the plan offers some fantastic opportunities. Many appreciate just paying a deposit and waiting for the construction or settlement to unfold without needing to pay any more money. However, sometimes circumstances change causing you to be unable to settle.
When buying off the plan you may need to wait 6-12 or even 24-36 months depending on the property type or location. Yes you can save during this time, but on the flip side sometimes your personal circumstances can change. Not always for the better.
We have encountered a few recent cases where buyers have purchased confidently to later find out they’ve lost their job, split from their personal relationship, fallen unwell or lost some money to something. When buying off the plan its important to maintain your financial and personal situation so that you have the ability to apply for finance when settlement approaches. What ever the circumstances we have a professional concierge service to help source a new buyer to take over your contract. This is managed through the term ‘and/or nominee’.
The term ‘and/or nominee’
A term ‘and/or nominee’ is also known as a ‘nominee sale’. This clause in the contract of sale, provides the option for someone who has purchased a property to find another buyer to step in and have the contract transferred to their name and finalise the settlement. This transfer of ownership releases all rights to the property, legal ties and the title of the property to the new nominee.
The title to an off the plan property doesn’t actually pass to the new buyer until settlement is reached. Technically, once you’ve signed an unconditional contract the property can be re-sold. However, you’ll need to review the contract of sale prior to signing. Some developers have a condition to restrict the re-sale of a propriety prior to settlement. Some also charge fees to complete the nomination sale. It’s ideal to speak to your conveyancer or solicitor in advance.
If a nomination sale is approved and a buyer is found, please note you’ll be required to pay your solicitor a fee to draft the documents and/or facilitate the property deposit with the new buyer. You should ascertain these fees before proceeding.
What else needs to be considered when re-selling an off-the-plan property
There are some important considerations to attend to prior to implementing the nomination sale.
- Taxation– In some situations if re-sold at a profit you may be liable to pay capital gains tax. Discussing these scenarios with your accountant or tax agent is essential.
- Stamp duty buying in. Although it doesn’t seem that you actually own the property for any period of time, the law considers that you will actually take ownership of the property. It’s important to remember that you will be required to pay stamp duty.
- Additional legal fees. When processing a ‘nomination sale’, you will be required to employ a solicitor to complete some forms to implement the sale. They are relatively simple to execute, but you’ll have to pay a solicitor to draft them.
- Most important – you remain bound. Even though you have a buyer to take over your purchase, if that buyer does not complete the purchase, you are still bound to settle with the developer. On this basis, we recommend working closely with us to ensure the buyer is capable to settle.
If you are in a situation where you need to get out of an off-the-plan property contract, please contact us immediately. We have a proven process to help.
We have many professionals and active buyers within our network to help relieve you from the contract and get your property deposit back.
If you’d like to learn more about property investment, our YouTube channel and Market Insights also provide a wealth of information to assist you with many areas relating to property.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
