Saw I own an investment property and I wrapped it to another person, so that they are in effect paying it off etc. just like a normal wrap, if I then get divorced, is my spouse entitled to half of the house or is she not because it is wrapped?
Hi Brizza
With the exchange of contracts that has taken place during the wrap process, it is likely that the court will decide that you have disposed of the property and the only part of the property that you retain, is the future proceeds from the Instalment Sales Contract (wrap). Therefore I believe the Family Law Court would divide the future proceeds from the wrap as it sees fit.
However, this is just my opinion. I'd strongly suggest that you talk with a vendor finance savvy solicitor about this.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks for the info. During the wrap process, are relevant docuemnts lodged with the authorities to signify the transfer of ownership?
This varies from State to State but certainly in Qld the only document lodged should be the Transfer Form however as soon as the wrappee lodges this then they are liable for Stamp Duty and my experience is that many dont lodge it until the decide to take possession.
Richard Taylor | Australia's leading private lender
I see. Thanks for the info.
So from a legal ownership perspective, if I've wrapped my property and the transfer documents have not been lodged, and no stamp duty paid, is my spouse entitled to half during a divorce? As in, do I still own it or do the people I'm wrapping it to own it?
Their debt to you being the balance of purchase price is your jointly owned asset and would be included in your overall assets in the event of a marital split up.
Of course as the income is received on a drip basis a more realistic figure factoring in both future interest received and then adjusted downwards taking into consideration the possibility of not being able to recover your money in full would appear a more prudent way of valuing the asset.
Richard Taylor | Australia's leading private lender
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