Forum Replies Created
Hi Ben
As Terry says, Tony Cordato is the man:
Cordato Partners
Level 5
49 York Street
Sydney 2000 (near Wynyard Station)
Ph (02) 8297 5600The following may also be worth a read:
https://vendorfinanceinstitute.com.au/should-all-home-buyers-get-national-credit-code-protection/Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Ben
I have no argument regarding the information given in the posts above. However, when it comes to the “consumer marketplace” things become quite grey. Rulings in courts and tribunals seem to rely much less on what’s written in the legal paperwork, as against what is fair to the consumer.
For an indication on how various consumer advocate groups feel about vendor finance, especially Lease/Options (Rent To Buys), have a read of:
http://consumeraction.org.au/fringe-dwellings-vendor-finance-rent-buy-housing-black-market-report/Even some sections of the vendor finance industry believe major changes to the regulation of residential Lease/Options are required. See:
https://dl.dropboxusercontent.com/u/4221546/Finance%20Brokers%20Association%20of%20Australia.pdfAnd regarding Options in NSW, I believe it’s imperative that you have read of:
https://www.linkedin.com/pulse/how-property-owners-can-walk-away-from-sale-options-right-cordatoCheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Ethan
The following may help:
https://vendorfinanceinstitute.com.au/should-all-home-buyers-get-national-credit-code-protection/In short, I believe that, if all home buyers using traditional home loan finance get the protection of the National Credit Code, then all consumer, residential home buyers should get this protection, no matter what sort of finance they’re using. Unfortunately Lease/Options don’t provide that protection.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Robert
As you are leaning towards Victoria it may be best to utilise an Instalment (Terms) Contract for the on-selling of the property you buy/build. This is because VIC is unique in that it doesn’t charge Stamp Duty until the Contract of Sale “settles”. In other States, Stamp Duty is payable within a number of days after “exchange of contracts”.
Also, unlike all other States, VIC charges Stamp Duty on Lease/Options the day they come into being.
As for your exit strategy, it’s worth noting that ASIC dislike “balloon” payments in the consumer space. See https://vendorfinanceinstitute.com.au/should-all-home-buyers-get-national-credit-code-protection/ We usually provide 30 year Instalment (Terms) Contracts to our buyers. Thereby avoiding the need for balloon payments. However we find most of our buyers refinance into a traditional home loan between years 4 to 7.
For us “template” DIY legal paperwork is a huge no no. Not only do we always use a lawyer to draw up the legal paperwork, we will not sell to a buyer that will not get independent legal advice. See https://vendorfinanceinstitute.com.au/the-risk-in-relying-on-template-documents/
A few other tips are available at: https://vendorfinanceinstitute.com.au/10-vendor-finance-mistakes-to-avoid-in-2016/
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Robert
A couple of links that will help to get you going with Vendor Financing are:
http://www.vendorfinancelawyer.com.au/ and
https://vendorfinanceinstitute.com.au/category/blog/It’s worth noting that a number of consumer groups and other “powers that be” are pushing to get Rent To Buys (Lease/Options) banned in the consumer/residential real estate marketplace at the moment. In my opinion, if they don’t manage to get them banned, they are likely to be successful in forcing them to be “regulated” under the National Credit Code (NCC).
The other popular method of vendor financing in the residential marketplace, the Instalment (Terms) Contract, is already regulated by the NCC.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Scott
Yes the FBAA Vendor Finance Meeting in Brisbane is still on next Thursday, algeit a a different venue from the last one. Full details and registration are available at: CLICK HERE
Also, if you’d like to keep up to date with happenings in the Vendor Finance Industry, take a look at the Vendor Finance Professionals FB group. It can be found at: CLICK HERE.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi All
If you are thinking of coming along don’t delay as there are only a few seats left. It’s looking like another sell out which shows just how many people are interested in bringing Vendor Finance into the mainstream.
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi CW
I am currently a Responsible Manager for both our ACL’s and have recently resigned from another Responsible Manager position I was covering for a third party due to various concerns.
How do you see such an arrangement working? Please PM or email me.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Di Daniel
First up, may I suggest you have a look at a page on our website, entitled ACL Coverage; CLICK HERE
Then give me a call, as there may be a way of structuring the transaction so you are not the credit provider. It is worth remembering that , if someone is simply disposing of an asset, e.g. one property, they may not be seen as providing credit ‘in the course of a business’ and therefore not need an ACL to provide credit in this situation.
Of course, if you are giving ‘credit assistance’ to a potential buyer then you will need ACL coverage to ‘engage in credit activities other than as a credit provider’. ACL coverage for this authority can be provided by Credit Rep status.
As always, get independent legal advice on this.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Happy to chat.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Steve
Terry’s recommendation is spot on, i.e. Lewis O’Brien is, in my opinion, the ‘go to’ vendor finance solicitor in Vic.
However be very careful of Victorian state legislation regarding Lease/Options and Stamp Duty. Unlike most other States of Australia, Stamp Duty in Victoria is not normally payable until Title transfer occurs. In most other States Stamp duty is payable within a specified number of days after exchange of contracts.
A couple of years ago Victoria alone introduced legislation that makes Stamp Duty immediately payable upon the establishment of a Lease AND an Option on a property.
This has resulted in Lease/Options being generally dropped by Vic based vendor financiers and vendor finance (VF) Instalment Contracts becoming the preferred VF technique for Vic properties. This is because, with and Instalment Contract on a Vic property, Stamp Duty is not payable until the VF buyer sells the property or refinances it and becomes the Title holder.
Another thing to remember is that VF sales, unlike traditional sales, need ongoing administration after the buyers move in. I’d suggest you Google for a ‘vendor finance management’ company.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi JBC
Yes we’ve been running our vendor finance business since 2003 and went full time in 2009.It’s been a pretty lazy January ;-) but we’ll start marketing again at the beginning of Feb (have got 4 to sell).
Vendor Finance has been fighting it’s ‘cowboy’ reputation for some time now but a combination of new legislation (the NCCP Act 2009) and last year being taken under the wing of the FBAA has certainly improved things. One of our businesses has been built to provide services and tools for vendor financiers so, yes, we do consult on vendor finance questions/issues regularly.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi weathjess
I like the ideas here regarding the retention of this property. As a number of people have mentioned, there does seem to be an opportunity to do something with the hospital.
However if that doesn’t work out, you may get some ideas regarding a long distance ‘negative2positive’ vendor finance sale at CLICK HERE.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
One of the best reads I’ve found regarding licensing, specifically for vendor finance, was written by Tony Cordato. It can be found via CLICK HERE.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi JBC
Knowing Jason personally and knowing how long he’s been in the industry I’d suggest you take his advice to heart ;-)
Back in 2003 when we started in Vendor Finance (VF), marking up a property by 20% over market price was the standard. How things have changed! Our standard way of pricing a VF sale these days is to do an auto-valuation on RP Data. The valuation then comes up with a low estimate, a high estimate and a mid point they call the estimated price. We now use the high estimate as our VF sell price. It’s a price we believe the various courts and tribunals you can end up in, won’t see as excessive. Don’t forget these institutions are ‘all about’ the consumer, as a purchase like this is possibly the biggest purchase your consumer may ever make.
On another issue, we are now keeping away from Lease/Options (Rent To Buy’s) big time. Being a member of the FBAA’s (Finance Brokers Association of Australia), Vendor Finance Steering Committee, I am seeing just how various regulatory authorities (Fair Trading Dept’s), consumer groups and other important stake holders have really taken aim at residential Lease/Options. For example, have a read of the following article showing how the Financial Ombudsman Service are now involved in the over-sight of Lease/Options. CLICK HERE for the article. A recent VCAT ruling in Vic regarding a L/O cost the VF’er $45,000 and these types of rulings aren’t isolated (see the cases in WA).
As vendor finance Instalment Contracts are regulated by the NCCP and seem to be quite acceptable to ‘the authorities’ we’re sticking with them. With this major push against L/O’s we have now given them away in our VF business. Your call of course.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Lejo
We write our Terms Contract (Instalment Contracts) to mimic traditional home loans, i.e. they have a 30 year term with a variable interest rate. Therefore, if you make your regular payments over 30 years the loan will be paid out.
If for some reason you could you cannot continue to pay a traditional home loan, the property is put up for mortgagee auction and after the bank takes all that’s owed to them, you get the rest.
The same can happen with an Instalment Contract, i.e. if you have built up equity, you can sell the property, pay out the vendor/lender and keep the rest.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Jimmy
Hopefully the following link to a media release from the FBAA (Finance Brokers Association of Australia) can help to start to clear up the ‘shady’ image: CLICK HERE to view the media release regarding Vendor finance.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Tamara
Would I be correct in thinking that you may be talking with Sellers about selling their home, without being an RE Agent or authorised RE Sales Rep?
If you are, may I suggest you have a look at Tony Cordato’s paper on the subject. To get access to the paper CLICK HERE. The relevant rule is Rule 4.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Rick
Thanks for your post. As a full time vendor financier and one of your ex students I found it fascinating. Good luck to you and the WA law society for backing that young fellow.
It's always been interesting to me to see how vested interests react to new ideas that threaten the status quo
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Disco
Getting Australian Credit Licence coverage for these transactions will just be one of the hurdles you face for this project, but it shouldn't be too difficult to jump.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
