Nomination clauses in off-the-plan contracts, explained

What is a nomination clause?

A nomination clause is a term in a contract of sale that allows the purchaser to nominate another person or entity to complete the purchase. In the off-the-plan market, it is one of the ways an original buyer can sell their position to a new buyer before settlement.

Nomination vs assignment

The two are often discussed together but can work differently. Broadly, a nomination substitutes a new party as the buyer at settlement, while an assignment transfers the purchaser's rights under the contract to someone else. The legal effect, documentation and duty treatment can differ, so your solicitor or conveyancer should confirm which mechanism your contract uses.

Common conditions

• Written consent from the vendor or developer
• An administration or nomination fee
• A deadline for nominating before settlement
• Limits on advertising while the development is still selling
• Requirements for the new buyer, such as finance approval or foreign investment approval

Questions to ask before you nominate

• Does my contract allow nomination, assignment, or neither?
• What will the developer charge, and how long does consent take?
• What happens to my deposit?
• What are the stamp duty and tax implications in my state?
• Can the property be marketed now, and how?

This guide is general information only and is not legal advice. Contract terms and state laws vary. Speak to a solicitor or conveyancer about your contract.

Frequently asked questions

Is a nomination the same as a sale?

Not exactly. A nomination substitutes a new buyer under the existing contract, while a sale after settlement is a new contract. The legal and duty treatment can differ, so get advice.

This guide is general information only and doesn't consider your circumstances. It is not legal, tax or financial advice.