dashitMember@dashitJoin Date: 2007Post Count: 4
Hi. I'm wondering how potential wrappees cover themselves against the death, say, of the wrapper. If I was going to finance my home using wrap finance, I'd want to know that the person I'm borrowing from was going to be around to complete the deal. Presumably this means that the wrapper needs to set up some sort of ongoing business entity.
DalePaul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
Upon the death of a Wrapper who is an individual, the Instalment Sales Contract passes into the wrapper's estate. The wrapper's beneficiaries will ultimately own the Wrapper's interest in the Contract.
As the new owners, they retain only the rights given to the original owner, i.e. because the interests of the original Wrapper have passed to a new owner, nothing gives the new owner the right to change the terms of the original Contract. Just out of interest, all Instalment Sales Contracts I've seen in NSW and Qld, allow the Wrapper to sell his/her interest in the Contract to another person.
My observation is that most Vendor Financiers end up conducting their business in a Corporate or Truat structure, As you mentioned this does make the passing of someone involved in the business less challenging.