Got the contract- what now?

[winwin]

Hi there all,

I am completely new to assignments (and property investing as a whole) yet I have managed to secure a contract which i want to assign and have a buyer- what now?
I know that i have to complete a "deed of assignment" upon doing so will make the agreement unconditional and my fee will be paid, but what about the actual contract? Do i change the name of buyer on contract then get the vendors to initial it again?
And what about my fee money? Does that need to go through my trading trust account? Also, with regards to the tax and gst- when do these things come out/off?
Anyone who has done assignments- feedback would be greatly appreciated!
By the way- this deal is for a 2brm unit in upper hutt, purchase price of 120k with reg.valuation of 180k

Thanks,

Winwin

[chook]

sounds like a good deal 34% below!
fill out and sign deed of assignment form,
buyer pays you fee,
buyer then goes unconditional on property
make sure you have AND/OR NOMINEE after your name on contract.
you will get taxed on your fee, and g.s.t will come out also, your accountant will do all of this.

[winwin]

Thanks chook,

So i dont need to change anything on the contract so long as i have 'and/or nominee' on there? is that what you are saying? I have my trading company name, and/or nominee on at present....
and my accountant will sort out the rest?
Sounds good then,
Thanks again

[Green Fish]

winwin: You can't change the contract without the agreement of the other party, ie, the vendor. I very much doubt whether you get the vendor's agreement.

But congratulations for putting this deal together. The important thing now is to get the deal through. You do not need to go to your accountant until afterwards. But you definitely need to go and see your lawyer immediately. You remain liable under the agreement, despite the assignment, so it's important that the right things are done, by the right person.

[chook]

you dont need your trading co name just your own.
after fee paid ass doc and s&p must be faxed to all soliciters involved, and buyer goes uncon!!

[Green Fish]

But there could be an issue as to who has the responsibility of giving notice that the conditions are satisfied. In my opinion, it is the purchaser's responsibility, rather than the assignee's. The best way to deal with the assignment is for the vendor to deal with the purchaser, and for the purchaser to deal with the assignee.

[NZGEMS]

Hello Winwin, good on you for taking some action. as you have been told your fee goes into your trading trust account and tax and gst are paid on it, the assignee will normally contact the lawyer of the seller then inform them they are taking it over, possibly your lawyer may pass these details to the seller or the assignee just direct.

if you want an assingment form send me an email on my private email at the bottom of the posting I can forward you a couple you could choose from, you will just need to change the details so it has your details not mine on it, I have a basic one which should normally be fine and another one which is really tough but protects you in the case of defaults from the assignees, you see unless you have the permission from the seller (which assigners rarely do) you are still liable even though you have assigned the property should the person refuse to settle for any reason.

I had this form done up after a nasty insicent which occured to me.

Still if you know this person you are probably safe enough.

I know you said you did the company name or nominee and always do this with trades otherwise if you sign your name they can personally go you if things turn to custard.

good luck and good on you for taking action when lots of others are sitting on their hands.

Robyn

[SuperDad]

winwin,

Are the vendors aware that: (a) you intend to assign the contract on their property, rather than purchase the property yourself, and (b) you have no idea what you are doing?

Paul.

[xris]

Helo winwin,

Forgive my doom and gloom, but GF made a valid point about your responsibilities to the contract. Depending on what it says you may be stuck with it, and without evidence to the contray that is what is probably the case. Your best bet may be to on-sell with a contemporaneous settlement although without access this will be difficult. I assume you are unable to settle yourself.

xris

[cube]

you dont need your trading co name just your own.
after fee paid ass doc and s&p must be faxed to all soliciters involved, and buyer goes uncon!!

Very dangerous advice, and likely to end up with any GST claim refused.

The others are right, although you can assign the contract, it is still yours, and you are responsible for settlement in the event that your buyer does not come through.

There is a clause (can't remember what its called, or where I've seen it) that you can put in BEFORE signing that informs the vendor that you intend to assign, and in that event all rights and responsibilities are passed to the assignee - wouldn't like to see it tested in court, though!

cube

[JohnL]

Property finding is a business with risks and probability of an event happening. Like anything, you minimise the risks as much as possible (ie vetting the assignee?) and have contingency plans if things go wrong.

If you have a trading trust, contemporaneous settlement is another option as it allows you to take a bigger profit when the deal is really good. It can suit an investor more as they can't include a finders fee within their loan application.

It doesn't really reduce your risk of an investor not carrying through.

John

[winwin]

Thanks everyone for giving me advice.
I am going to see my lawyer tomorrow and talk with him about what needs to be done to get this deal completed.
I believe the the vendors will be fine with the change of name on the contract as in this case the buyers are actually my parents, although i will let you all know what 'goes down' with regards to that in my next installment!

[Green Fish]

If the vendor's fine with changing the name, then a novation is the preferred option, rather than an assignment. However, many vendors will not agree, because they think they might have been taken advantage of. They might agree to changing the name, but only if the purchase price is also changed. Obviously, that won't suit you.

One method to discuss with your lawyer is the use of the nomination procedure, with your lawyer acting for both you and the assignee. A purchaser is entitled to nominate the entity to whom title is transferred. So although Joe Bloggs might be the purchaser under the agreement, he is entitled to nominate "Joe Bloggs LAQC Ltd." as the entity to which title is transferred. In the same way, you are entitled to nominate your parents. But you remain as the purchaser. On settlement, you pay the money in exchange for a transfer to the entity you have nominated. Where are you going to get the money from? Your parents, hopefully, will obtain finance from their bank, and the money will be paid into their lawyers trust account. If you and your parents both use the same lawyer, it is easier and saves legal costs. It's not ideal, but given the family relationship, this might be a suitable case where one lawyer can act for two parties.

From the vendor's perspective, there is very little that is unusual. You, as purchaser, declare that the contract is unconditional and nominate your parents to take title. On settlement, the money is paid to the vendor by your lawyer, on your behalf, and you receive a transfer to your parents.

[chook]

cube, you are..

dead right, IRD legislation states you must use your trading trusts corporate trustee, to avoid tainting.
using your personnel name was o.k up untill a year ago

[xris]

dead right, IRD legislation states you must use your trading trusts corporate trustee, to avoid tainting.

Where????????????