Self managed superannuation funds have become increasingly popular.
An advantage of a self managed superannuation fund is the freedom to invest in property and/or shares or other types of investment.
It’s not uncommon for a conveyancing matter to hit our office with this being the case. To be honest, they’re not all that more difficult than an ordinary purchase as an individual.
One crucial factor will determine how complex or straight forward the transaction will be.
Will the super fund need to borrow money from a financial institution?
If the answer is YES, you need to take extra measures to ensure the security of the balance of the super fund.
This is done by creating a separate trustee company known as a BARE TRUSTEE. The Bare Trustee will enter into the mortgage with the lender. This will safe guard the balance of any assets in the super fund to ensure they’re not put at risk if the fund defaults on loan repayments.
However, the lender would have security over the property. They are entitled to sell the property to use the proceeds to repay any loan.
It is important to ensure that all the superannuation trust deed documentation is complete. Your solicitor will need a copy of these documents to ensure that the property is purchased in the correct name of the trustee.
If the super fund will not be borrowing money, then the process is much simpler and no bare trustee is required.