Buying Property Through a Trust? Get the Contract Right From the Start

This article is not legal advice and is general information only.

If you are buying a property through a trust, the contract must identify the correct purchaser and trustee capacity from the outset.

Before signing, make sure both the real estate agent and your solicitor know that the property is being purchased through a trust.

If the wrong purchaser is named, correcting the contract later may result in additional legal costs, and settlement delays. If not done properly, additional transfer duty may also be payable.

The correct purchaser must be named

A trust is not itself the legal owner of property. The trustee acquires and holds the property on behalf of the trust.

The purchaser should therefore be identified in the contract in the trustee’s correct legal capacity. For example:

Joe Brown as trustee for the Brown Family Trust rather than simply Joe Brown.

If a company is the trustee, the contract should use the company’s full registered name and ACN, together with its trustee capacity.

This is different from simply naming Joe Brown or the company as the purchaser in its own right.

Do not assume the purchaser can be changed easily later

The purchaser is an essential part of the contract. If the contract names the wrong purchaser, the problem generally cannot be fixed safely by simply crossing out one name, inserting another or exchanging emails between the solicitors.

The process and duty treatment differ between states and territories, so the purchaser structure should be confirmed with your solicitor before signing.

Have the trust documents ready

As a practical matter, the trust MUST be properly established and the trust deed executed before entering the contract.

Provide your solicitor with:

• the complete trust deed;
• every deed of amendment or variation;
• the trustee’s full legal details;
• the company search if there is a corporate trustee; and
• any documents appointing or replacing a trustee.

Speak to your lender as well

Your lender must also know that the purchaser will be acting as trustee. Finance approval obtained in an individual’s personal name may not be suitable where the borrower or property owner will be a trustee or corporate trustee.

The bank may need to review the trust deed, trustee company, guarantees and borrowing powers before issuing final approval.

More questions?

Getting ready to buy? Contact Keylaw early for clear guidance from contract to settlement.