Nomination Risks When Purchasing Property

Nomination Risks When Purchasing Property

Purchasing property and nominating another buyer later might seem straightforward, but it carries risks—especially when land development is involved. If you nominate a new buyer i.e. before settlement, after any development activities, you may be hit with a second round of stamp duty, commonly called ‘double duty.’ Many buyers and even some professionals misunderstand what counts as land development, which can lead to costly mistakes.

Buying a property is a big deal, and sometimes things change—you might need to nominate someone else to take over the contract before you settle or can take ownership. But here’s the catch: if you’ve already started any land development activities, like applying for a permit or subdividing the land, you could end up paying double stamp duty. This can be an expensive oversight, but it’s also preventable with the right advice at the right time.

Understanding the Risk of Double Duty

Under Victoria’s Duties Act 2000, if land development happens before you nominate another purchaser, the State Revenue Office treats it as a sub-sale, triggering an extra round of stamp duty. This is why getting advice before taking any action is crucial. Many buyers don’t realise that even small steps—like applying for a planning permit—can count as land development.

When to Get Advice

There are two key moments when you should be extra careful:

1. Before signing the contract – If you think you might nominate another purchaser, try to sign in their name from the start. If that’s not possible, make sure you don’t carry out any development activities before making the nomination.

2. Before making a nomination – If you’ve already signed the contract and are thinking about nominating another buyer or transferee, check whether any development activities have taken place. Even if a town planner or architect applied for a permit on your behalf, it could trigger double duty.

How to Avoid Costly Mistakes

• Plan ahead – If you’re considering nominating someone else, talk to a property lawyer or conveyancer before taking any action.

• Nominate early – If you must nominate, do it before any land development activities start.

• Get written advice – A lawyer or conveyancer should clearly outline the risks and get your acknowledgment in writing.

Nominating another buyer for your property might seem simple, but it comes with potential pitfalls. Double duty can be an expensive mistake, but with careful planning and the right advice, you can avoid it altogether. Before making any moves—especially before applying for permits or making changes to the property—speak to a professional to ensure you don’t end up paying more than you need to.

DISCLAIMER

This commentary is published by HazeLegal for general information only—it’s not legal advice. If you have questions or need advice for your specific situation, we recommend speaking to a lawyer or reaching out to us at http://hazelegal.com.au before making any decisions.

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