Something that is becoming more prevalent in newly built apartments and some houses, is the nominee sale. A nominee sale provides the option for someone who has purchased a property but cannot settle on it, an opportunity to find another buyer to step in and have the contract transferred to their name and finalise the settlement.
A nominee sale generally comes about due to a buyer of a property not having access to the funds to settle, mostly due to banks not approving loans after a property has become an unconditional sale (for more info on what an unconditional sale is click here). Once the purchaser has exhausted all avenues for finance and failed, they will have to on sell the property. The property will then come up for sale through regular real estate mediums as a ‘nominee sale’. This now gives the option for a new buyer to purchase the property. Once a buyer has been found, the original purchaser will then nominate the signed contract to the new buyer. This will release any legal ties with their name or entity and the title of the property.
This is one of the reasons we add ‘and or nominee’ to contracts. In a majority of cases, this term is added so buyers are able to nominate a trust fund or add a partner to the title, but in cases where buyers aren’t in a position to settle on their property, they are able to nominate anyone they choose, even a newly introduced buyer.
Bear in mind, this doesn’t mean that the new buyer will pay what you are asking for or the original purchase price. In many cases, nominee sales result in a loss. Sometimes it is minimal and other times it could be your whole deposit, usually ten percent. This sale is to get you out of a bind and prevent you from legal actions and possibly bankruptcy. This isn’t an option to try to capitalise and make a profit on a sale that you haven’t even settled on, though in some cases of highly anticipated property, there may be an opportunity. As there is a lot more involved, we recommend that you seek professional legal advice on the matter, though hopefully this can give you some insight and maybe a little hope if things take a change for the worst.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.