hey,
I was wondering if anyone had ever bought off the plan and then wanted to change the contract after the contracts were exchanged. Allow me to elaborate….
I have recently purchased an off the plan unit from a developer friend who said he would do a put and call option for me. I received a $29k discount on the purchase, securing it with a deposit bond. In my haste, I signed a normal contract and now considering the settlement in 6 – 10 months time, I am thinking of my profit being eaten away by closing costs. I am wondering if I can approach my friend and ask him if I can change the contract (he was anxious to sell some of the properties under his bank’s instructions), to help me out with my settlement costs and profit.
Any ideas, or is this one of those lessons not to be repeated next time?
Thanks,
Ali.
What contract did you mean to sign, vs the normal contract you signed?
It might be best to talk to your solicitor to see what options you have. Did you have the discounted agreement in writing anywhere? If you friend is reasonable and accepts the error, he might happily let you rescind and redo the contract. However if there is confusion you might run into difficulties. This is why it might be good to spend a few hundred dollars on legal advice first to see what your next steps should be.
Do give us a few more details, others here may be able to offer some more detailed advise.
Cheers!
Sheryl DuruzAli
I’m guessing that you plan to onsell? Otherwise closing costs would not be an issue?
I believe that contracts can be amended if both sides are agreeable. It may be interesting to find out though as the contracts may have been lodged with Rev Office, and if it changes now they may think you are trying to avoid stamp duty in onselling.
Cheers
Mel
Ali
I believe that contracts can be amended if both sides are agreeable.
Cheers
MelSpeak to your vendor and find out. Normal Contracts can be amended and can also be subjected if you feel the need to, as long as both parties agree. As for what was said earlier, speak to your solicitor.
I have seen a situation in NSW where a couple signed the contract and then split up before settlement. The vendor agreed to rescind the contract and issue a new one with only one of the party. All other details were the same, and no extra stamp duty was paid.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Hi all,
hmm signed sealed and delivered means that done and done, however if this guy/gal is nice you might be able to counter offter with the changed terms, depending if the part of the contract you wish to change if it is a warranty(small part) or a condition(BIG part), but do seek legal advice before tryign anything. I doubt he will rescindt he contract if has recieved monies as to get the money back to you it will cost the other partie.
But im not a lawyer so again seek independent advice.
Regards Josh
Hi everyone,
Thanks for your words of wisdom. To update you:
Yes, I have spoken to my solicitor and they have said that the contracts will need to be rescinded. Another can be drawn up with the put and call option in place. Apparently upon exchange of contracts they (the contacts) are lodged with the Office of State Revenue. I have asked my solicitor to confirm if the Office will think I am trying to dodge the stamp duty by signing another contract for the same property with an option of on-selling or settling – thanks for the tip Melbear! I wait to hear back from them.
I guess I am trying to weigh up the advantages and disadvanatges of settling the property, pay stamp duty, keeping it empty for three months (PPOR) and selling it – minimising capital gains. Or, taking the profit from not paying stamp duty (and also from the discount gained) when onselling it upon settling time and paying capital gains.
As I am trying to gain all info before going back to the developer friend, I appreciate your responses and will post to let you know the solicitors final words.
Thanks,
Ali.
Having an option to buy and thence selling the option ?
I believe that the stampduties office would consider the option itself as a document which will attract stampduty at the same rate as a contract.
So you wouldn’t be able to avoid stampduty unless your friend the developer would be prepared to co-operate.
And both of you would be breaking the law by being a party to evading stampduty.
I doubt that a solicitor would be readily be prepared to be involved as it wouldn’t be worth his while to run the risk of losing his ticket to practice.
The vendor’s solicitor too will not be happy being involved and will therefore be advising his client (your friend) against replacing the contract to purchase with a call option.
If you want to get advice from your solicitor it would have to be based on a hypothetical scenario.
You can also get the same information free from the stampduties office.
Pisces133
Peter
You are incorrect in your assumption that the option contract has stamp duty payable on it like a regular contract. This is one of the (only?) legal ways of being able to onsell a piece of property at some point in the future without you ever owning it, and you don’t pay stamp duty.
An option is a choice as to whether you buy or not, you do not have to, but you may lose your option fee. If you do not buy, you do not pay stamp duty.
Even if it is a Put and Call option, you do not have to pay stamp duty, but you do pay ‘income’ tax on any profit.
Cheers
MelMel I have actually checkd this type of scenario with the stampduties office (in NSW) and my statement is correct.
However, I believe you are quite correct in that, if you don’t exercise the option, that in that case no stampduty is payable [or at least not at the same rate as the transfer duty (stampduty) payable on a Contract of Sale].
Cheers
Pisces133
Peter, that is my point. If I onsell the option to somebody else who then exchanges contracts and purchases the property, I am not exercising the option, and therefore will not pay stamp duty.
Cheers
Mel
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