UNDERSTANDING THE ‘AND/ OR NOMINEE’ CLAUSE

At the most literal level, a nominee is simply a person named by another. In the conveyancing context, a purchaser enjoys a common law right to require the vendor to convey the property to a person named by the purchaser. The traditional position has been that a nominee derives no enforceable rights by being named by the purchaser, and the purchaser can revoke the nomination at any time before the transfer is registered. Thus, despite the nomination, the purchaser retains all rights and obligations under the contract – the nominee receives none.

Nomination of a person to take title contrasts with other common means whereby an agreement for sale and purchase between a vendor and purchaser of land may ultimately result in a third party taking title. These means include an assignment of the purchaser’s rights, an on-sale with contemporaneous settlement and a novation of the contract.

By entering into an agreement with a purchaser ‘and/or nominee’, the vendor appears to have agreed to contract with the purchaser on the basis of one of the following positions:

• The vendor has agreed to contract with the purchaser;
• The vendor has agreed to contract with an unknown person (to be named by the purchaser after the contract is entered into);
• The vendor has agreed to contract with the purchaser and an unknown person (to be named by the purchaser after the contract is entered into);
• The vendor has agreed to contract on the basis that the purchaser may assign its interest to an unknown person (to be named by the purchaser after the contract is entered into), with that person taking over all of the purchaser’s rights and obligations under the contract; or
• The vendor has agreed to contract on the basis that the purchaser may assign the benefit of the contract to an unknown person (to be named by the purchaser after the contract is entered into), with that person taking over only the purchaser’s rights under the contract.

 
If you have any questions or would like to know more, please contact us for a FREE no obligation consultation on 03 8390 5855 or email mitesh@thinkandgrowfinance.com.au