Nomination of Purchaser Agreement

Nomination of Purchase Agreement: A Comprehensive Guide

A nomination of purchase agreement (NPA) is a legal document used in real estate transactions to transfer the right to purchase a property from one party to another. This agreement allows the original purchaser (known as the “nominee”) to nominate another person or entity to purchase the property on their behalf.

The NPA is a common tool used by real estate investors and developers to secure a property while they line up the necessary financing or complete due diligence on the property. It is also used when the original purchaser cannot complete the transaction for some reason, such as a change in financial circumstances, and wishes to assign their right to purchase to someone else.

When using an NPA, it is important to understand the legal implications and requirements of such an agreement. Here are some key considerations to keep in mind:

1. Get Legal Advice: Consult with a real estate lawyer to ensure that the NPA is properly drafted and executed. The agreement should be tailored to your specific situation and the laws of your jurisdiction.

2. Identify the Parties Involved: The NPA should clearly identify the original purchaser (the nominee) and the party being nominated to purchase the property (the nomineee). It should also state the terms of the transfer, including any conditions or fees.

3. Obtain Consent: Typically, the seller must consent to the nomination of the purchaser. This means that the seller must agree to sell the property to the nomineee instead of the nominee. It is important to obtain this consent in writing to avoid any misunderstandings or disputes.

4. Consider Financing: If the nomineee will be obtaining financing to purchase the property, the NPA should address how the financing will be obtained, who will be responsible for obtaining it, and any conditions that must be met.

5. Tax Implications: Depending on your jurisdiction, there may be tax implications associated with an NPA. Consult with a tax professional to understand the implications and to ensure that you are in compliance with all applicable laws.

6. Timing: The NPA should specify the timeframe for the transfer and any deadlines or milestones that must be met. This will help ensure that the transaction proceeds smoothly and efficiently.

In conclusion, a nomination of purchase agreement is a useful tool in real estate transactions that allows the transfer of the right to purchase a property from one party to another. However, it is important to understand the legal implications and requirements of such an agreement and to obtain professional advice before using it. By following these guidelines, you can use an NPA effectively and avoid any potential pitfalls.