Nomination Clauses in Property Contracts: Hidden Risks Every Victorian Buyer Should Know

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What Is a Nomination Clause?

A nomination clause allows the named purchaser on a contract to nominate another person or entity to complete the purchase at settlement.

The original buyer doesn’t sign a new contract—the nominee simply steps into the original purchaser’s shoes. These clauses are often used:

  • When the buyer wants the property in a company or SMSF name

  • When another person is financing the deal

  • To defer deciding the final ownership structure

But here’s the catch: while nomination is legally permitted, it comes with serious risks under Victorian law, particularly around stamp duty, finance approval, and contract enforcement.

Why Buyers Use Nomination Clauses

Buyers sometimes think nomination gives them:

  • Flexibility to change their mind

  • Time to set up a company, trust, or SMSF

  • The ability to buy on behalf of someone else and decide later

  • A workaround if they aren’t ready to commit to the final buyer structure

Unfortunately, this flexibility can backfire—badly.

Key Risk #1: Double Duty Liability

Under Section 32J of the Duties Act 2000 (Vic), if there is:

  • Consideration (payment or benefit) from the nominee to the original purchaser, or

  • Any additional agreement or arrangement, such as a side deal, profit share, or backdated trust arrangement

…then the SRO can treat the nomination as a sub-sale and impose double duty.

This means:

✅ Duty paid on the original contract
❌ Duty paid again on the nomination—based on the full price

This can cost buyers tens of thousands of dollars and usually arises after the contract has gone unconditional.

Key Risk #2: Finance Failure

Lenders scrutinise contracts. If the name on the loan application doesn’t match the contract, or if nomination occurs after formal approval, the bank may:

  • Refuse to honour the loan

  • Require a new approval (which takes time and may not succeed)

  • Treat the contract as inconsistent or unverified

If you can’t settle due to nomination confusion, the vendor can terminate, retain the deposit, and sue for loss.

At Victorian Property Settlements, we’ve seen nomination-related finance collapses on multiple occasions. It’s a preventable disaster.

Key Risk #3: Loss of First Home Buyer Benefits

If you’re relying on:

  • The First Home Buyer Duty Concession

  • The First Home Owner Grant, or

  • The Principal Place of Residence (PPR) duty exemption

…a nomination could wipe out your eligibility.

That’s because the nominee may not meet the eligibility criteria—or the SRO may view the transaction as involving non-natural persons, trusts, or non-resident parties.

The result? Thousands lost in waived benefits.

Key Risk #4: Anti-Avoidance and Audit

In 2025, the State Revenue Office and federal agencies (e.g. ATO) are cracking down on contract restructuring, particularly when:

  • Purchasers try to defer setting up an SMSF or trust

  • Foreign buyers use residents as proxies

  • Purchasers attempt to “flip” a contract after exchange

Even a well-meaning nomination can appear suspicious. A post-settlement audit can delay registration of title—or worse, trigger penalties.

When Is Nomination Safe?

A nomination is generally low-risk if:

  • There is no change in beneficial ownership

  • The nominee does not pay the original purchaser

  • The entity (e.g. company or trust) existed before exchange

  • You obtain clear tax and duty advice beforehand

  • It is disclosed to your lender early

Even then, we recommend the nomination form include:

  • A statutory declaration confirming no consideration was paid

  • A clear paper trail to satisfy the SRO

David Dawn’s Advice on Nomination

“A nomination can work—but it’s not a casual clause to fall back on. Treat it like a high-risk transaction that can cost you the deal if done wrong. Always seek advice before signing.”

At Victorian Property Settlements, we:

  • Warn clients at the contract review stage

  • Flag when nomination is risky or tax-sensitive

  • Advise on eligibility for duty exemptions and grants

  • Assist with formal nomination forms and declarations

Final Thoughts

Nomination is not a loophole—it’s a technical legal tool. When used carelessly, it can:

  • Destroy finance

  • Invalidate duty concessions

  • Lead to double taxation

If you’re unsure whether to use a nomination clause—don’t sign anything yet. Get advice from a licensed conveyancer who knows the risks.

Get Professional Advice on Nominations Before You Sign

Victorian Property Settlements – Trusted by buyers, trustees, and SMSFs across Victoria for over 25 years.
📍 Frankston | 📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au