Assigning the benefit of a contract

Occasionally a client will exchange a contract in one name but wish to complete the transaction in the name of another. This is common for groups of companies and high net worth individuals. In property transactions condition 1.5 of the Standard Conditions of Sale (Fifth Edition - 2018 Revision) would need to have been removed or amended to allow this to take place. In auction contracts this would also be a common exclusion. It is important therefore to understand the client's instructions so the correct advice can be given at the outset.

If this is to happen, you need to bear in mind the following points:

1. If you want to complete in the name of an overseas company, then you'll need to have enough time between exchange and completion. Getting a company registered with Companies House is taking a long time and so this is only an option when the substitute company is already registered with Companies House or where you have adequate time (currently more than a month) to set up a new overseas company and get it registered.
2. You will need to consider who is the firm's client. It is fine for us to act only for the original purchaser. We can receive funds from them and send funds for them. At the last minute they can nominate another as the party to be the owner and we will never act for them. We will need to tell them expressly that we owe the new buyer no duty and do not act for it. We will also need to address with our client how it is to complete in the name of the substitute. Will it be a gift, or a loan, and of what, the property or the funds? We can advise that client, but not the substitute, who is never our client.
3. If we are to act for the substitute, then you will need to consider how this is to work. It is best to cease acting for the first client and set up a new retainer for the substitute. This will be subject to the usual AML checks which are usually quick, but for a complex substitute, there is no upper limit on how long things can take. You will also need to consider the substitute€˜s tax position (both stamp tax and other taxes), and if we are not advising on this, ensure that there is adequate time for them to obtain specialist advice (if required).
4. If we receive funds from the original client, then, unless they are sent back to them, we will need to consider how the funds are used to exchange/complete in the name of another. Such constitutes a transfer of those funds. Such a transfer is a gift or a loan. We can never act for both parties on such a transfer, only for one, or sometimes none. This will require careful consideration and it is best to call the Compliance Team if this will apply to you. For example, it is common for a parent to complete in the name of a child, but what if the child falls out of favour and the parent wants the money/property back.
5. For commercial colleagues completing in the name of a group company, it will depend on whether there is any element of effective transfer out of the group as to whether we need to view the substitute as a third party. Still tricky, and worth speaking to the Compliance Team though if so.