Property Transfer – What to do if your property is transferred into the wrong name
This article is a case study of a recent matter we were involved in. We have not used the real names for the parties.
Facts:
In 1999, Brad and Angelina established the Brangelina Superannuation Fund (Fund), with Brad and Angelina as the trustees of the Fund. Over the years, the Fund made investments, including the purchase of real property in Melbourne in 2014 (Real Property).
Brad and Angelina incorporated a company called Brangelina Pty Ltd (Service Company) which serviced their small business paying insurances, wages and superannuation etc.
Since the purchase of the Real Property, Brad and Angelina resigned as trustees of the Fund and Pitt Co Pty Ltd (Pitt Co) was appointed as the new trustee of the Fund. Brad and Angelina are directors of Pitt Co.
At the time of the transfer, Brad and Angelina’s legal representative mistakenly registered the Real Property under the name of Brangelina Superannuation Fund Pty Ltd (Company), a separate entity with no relation to Brad, Angelina, or any of their entities.
The error remained undiscovered until 2023. Given the similarity of the spelling of the Fund, the Service Company and the Company, when Brad and Angelina saw that the Company was listed on title of the Real Property, they presumed it was the Service Company and engaged Harwood Andrews to rectify the presumed error, being a transfer from the Service Company to Pitt Co as trustee of the Fund.
Upon review of the title information and ASIC extracts, we identified that the issue was larger than transferring the Real Property from a related party. Ordering an ASIC search for the Company, we found that the Company was incorporated in a different state and although the directors of the Company shared the first names with Brad and Angelina, the Company was an entirely unrelated party.
Solutions:
Instances of property titles bearing names different from the current owners are not uncommon. Such discrepancies can arise due to changes in personal names or company details. In such cases, title holders may seek redress under Section 32 of the Transfer of Land Act 1958 (Vic) (TLA), allowing for the correction of errors in property registrations through applications to Land Victoria.
However, the situation here presented a more complex challenge, as the Real Property was erroneously transferred to an unrelated company. This meant we could not unilaterally submit a section 32 TLA application, but had to arrange a transfer of land from the Company to Pitt Co. As a result, the land will need to be transferred into the correct name, which ordinarily triggers land transfer (stamp) duty.
Despite the significant time elapsed, there are options for rectification which include applying for an exemption for land transfer (stamp) duty. In this matter, we submitted an application for an exemption pursuant to section 34 of the Duties Act 2000 (Vic) (Act). These types of transactions are known as the Apparent Purchaser Transfer.
Correction:
We were fortunate that once we contacted the Company’s directors and alerted them of the error, they cooperated and assisted in facilitating the application process. This allowed Harwood Andrews to make an application to the State Revenue Office (SRO) on behalf of Brad, Angelina, the Fund, and Pitt Co.
An Apparent Purchaser Transfer is exempt from duty when:
a transfer of dutiable property from an apparent purchaser to the real purchaser where when the property is vested in the apparent purchaser upon trust for the real purchaser;
the real purchaser provides all the purchase monies for the initial purchase; and
no consideration is paid by the real purchaser to the apparent purchaser.
In this case, the Company is the apparent purchaser, and the Fund is the real purchaser.
A key component of our application was that we had documentational evidence (bank statements) confirming that the Fund provided all the purchase monies for the Real Property and accordingly, there was an implication that the Company was holding the Real Property on trust for the Fund.
The SRO agreed with our argument and accordingly issued a full exemption to land transfer (stamp) duty.
Recovery:
The final step is for Brad and Angelina to recover the legal and conveyancing costs incurred to finalise the correction.
The failure of the previous lawyer to verify the identity of the Company and its directors highlights the importance of taking steps to verify the identity of Companies, which included verifying the identity of directors.
Key Takeaways:
This matter demonstrates the importance of due diligence in property transactions and the potential complexities that can arise from errors.
The minimum requirement when undertaking property transfers is to confirm the identity of the parties involved, including the identification of trustees, companies, and directors. When acting for a trustee, the trust deeds must be examined to ensure the trustee has the right to deal.
Through diligent legal representation and available legal mechanisms, even longstanding errors in property titles can be rectified, albeit with additional costs and efforts.
If you have identified an error with your property title name and require assistance or wish to obtain further information, please contact:
Alasdair Woodford
Principal
03 5225 5217
0436 456 144
E: awoodford@ha.legal
Joseph Flanagan
Senior Associate
03 5226 8504
jflanagan@ha.legal
Maddi Batchelor
Graduate Lawyer
03 5225 5214
mbatchelor@ha.legal
