Legal Contracts: What’s In A Name?
When preparing legal documents or entering into a contract it is crucial that the parties’ names are complete, spelt correctly and match their legal identification such as a passport, drivers licence or birth certificate.
In this article we explain the importance of using your name correctly for the purpose of property transactions.
Common Mistakes
Common mistakes that are made when entering a name on a contract often include;
- Anglicised names or nicknames – These are names people may go by on a day to day basis that do not reflect their legal identification;
- Marriage or divorce – Where one of the parties have changed their name;
- Middles names – Often omitted due to them being unused and/or forgotten;
- Party is a trust – Not using the full legal name of the trustee and the trust
- Data entry errors – Such as typographical errors or even errors arising from an oversight in a previous transaction; and
- Cultural awareness – Some foreign names are written with the last name first.
Importance of Correct Names in Property Transactions
In property transactions it is particularly important that the identification of a seller exactly matches the registered title of the property that is being sold. It is recommended that a title search on the property is conducted before the contract is signed to ensure the names match. Similarly for the buyer, whether they are an individual, a company or a trust, the exact details must be inserted.
In most circumstances when buying or selling property you may engage with a real estate agent. The expertise of real estate agents includes marketing, negotiating and achieving the best price and contract terms, but agents are not legally trained and sometimes do make errors in respect of this issue.
Agents are encouraged to undertake a title search and to obtain copies of parties’ identification to ensure the details are correct when preparing contracts of sale.
Signing A Contract
Once you have signed a contract of sale in Queensland, typically the names of the parties cannot be changed unless a strict process is followed. Even minor changes such as incorrect spelling or a missing middle name on a contract may require the formal written agreement of both parties. Errors of this nature can cause difficulties or delays with finance applications, which can impact the process of settlement.
If you sign a contract that does not reflect the correct entity, or you want to change the name completely, it would need to be corrected by the parties entering into a Deed of Rescission which serves to terminate the original contract on the condition that a new contract is entered into by the correct buyer and seller.
Using A Professional
Solicitors are conveyancing experts who have been specifically trained in this area of law. The acting solicitor will ensure that the deed and new contract of sale are legally binding and that there are no adverse stamp duty implications for any of the parties involved.
For example, if an amendment to a buying entity was made without a Deed of Rescission, the Office of State Revenue may determine that the variation to the contract is a separate transaction and impose Transfer Duty on both transactions, causing significant expense.
We Can Help
To save unnecessary delay, stress and cost in your property transactions it is best to seek pre contractual advice from someone experienced in property law and Conveyancing.
Please contact the friendly team at ABKJ lawyers so we can assist you in this regard on (07) 5532 3199.
Frequently Asked Questions
Why do names on a contract need to match legal ID exactly in property transactions?
Using the correct legal names on property contracts is essential as it ensures the contract is legally valid and enforceable. If the names do not match the parties’ legal identification or the property title, the contract may not correctly bind the intended buyer or seller. This can cause delays, disputes, or complications at settlement, and may require additional legal steps to correct the error.
What are the most common naming mistakes on contracts (nicknames, anglicised names, middle names, etc.)?
Common naming mistakes on contracts include:
- Using nicknames or anglicised names instead of the person’s legal name
- Omitting middle names
- Failing to update names after marriage or divorce
- Data entry or spelling errors
- Misunderstanding cultural naming conventions
- Incorrectly recording a trustee’s full legal name when a trust is involved
These errors can create legal complications and delays during property transactions.
How do marriage or divorce name changes impact a contract of sale?
Marriage or divorce can result in a legal name change. If a contract uses a name that does not match the person’s current legal identification or the name recorded on the property title, it can complicate the transaction. Ensuring the correct legal name is used from the outset helps avoid delays or issues later in the conveyancing process.
What extra naming requirements apply when a party is a trust (trustee name and trust name)?
When a party is acting through a trust, the contract must correctly identify the trustee as the legal entity entering the contract and also refer to the name of the trust. Simply naming the trust itself is not sufficient, because the trustee is the entity that legally holds and manages property on behalf of the trust.
What happens if a contract is signed with the wrong legal entity as buyer or seller?
If a contract is signed with the wrong legal entity listed as a party, it can create significant legal complications. The contract may not properly bind the intended buyer or seller and may require additional legal steps to correct the issue.
In some cases, the parties may need to terminate the original agreement and enter into a new contract with the correct entity.
Can the parties correct the buyer or seller name without starting over, or is a new contract required?
Minor errors, such as spelling mistakes or missing middle names, may sometimes be corrected with the written agreement of both parties. However, more substantial changes, such as replacing the legal entity listed as buyer or seller, usually cannot be amended and may require terminating or replacing the contract with a new agreement.
What is a Deed of Rescission, and when is it used to fix incorrect party details?
A Deed of Rescission is a legal document used to terminate an existing contract by agreement of the parties. It may be used when a contract contains the wrong buyer or seller entity.
The deed cancels the original contract, provided that a new contract is entered into with the correct parties.
Can fixing names after signing create stamp duty or other unintended consequences?
Yes. If party details are changed incorrectly after a contract has been signed, the change could be treated as a separate transaction for duty purposes. This may lead to additional transfer duty being assessed, which can significantly increase costs.
Obtaining legal advice before making any changes helps avoid these unintended consequences.
