Use Vendor Finance To Buy An Investment Property?

No, you didn't offend me Terry. That is ok. I understand your scepticism.

The reason why these laws are not challenged in the High Court is because most people are unaware that they do contradict our constitution & yes you are right, they do become invalid. However what people need to realise is ignorance is not bliss.

In regards to the part of the constitution regarding varible interest rates, I would have to look it up the same as you. I read it/heard it during the many hours I have put into researching this but I am a long way off of becoming an expert on the subject.

There is a strong constitutional movement here in Australia as well as in the UK, Canada & the USA.

People in the Australian movement have been researching & putting this into practise for many number of years now. They would be the ones to talk to specifically about this.

I did however come across these recently. Remember how in a previous post I stated that local governments are unable to make laws, by-laws etc?

Here are a couple of 'template' letters that can be used in regards to local councils trying to enforce their laws.
http://www.larryhannigan.com/laws01.htm
http://www.larryhannigan.com/law02.htm

They have already been used very successfully on a number of occasions by individuals.

Who among us would love not to have to to pay council rates? Considering this is after all a property investing site & council rates can add up to a lot.

Here is a link to a letter from the former federal Attorney General confirming what I have just said about the non recognition of local councils. http://www.larryhannigan.com/Attorney_General_Referendum_Letter.pdf

The gentleman who owns & runs this website, as well as many others, has been fighting constitutional battles for many years so he would be a great person to ask about variable interest I'm sure.

If I come across the information again, I will certainly forward it onto you.

Ok, the information on variable rates:

For a loan contract or any agreement under Common Law there are eight essential elements.

There must be –

(1) an offer;
(2) acceptance;
(3) sufficient consideration;
(4) capacity to contract;
(5) intention to enter legal relations;
(6) legality of purpose;
(7) genuine consent; and
( certainty of terms.

The problem with varible interest rates is in number 8, that it is NOT 'a certainty of terms'.

In fact the word 'variable' in the Oxford Dictionary means 'uncertain'. So in actual fact the banks are commiting contract fraud under Common Law. The uncertain terms of varible interest.

Individuals have used this argument in courts in recent times.

I hope this helps.

I'm sorry, isn't this what you meant by this post?

Thanks for this more concrete informaiton.

Do you have any caselaw to back this up?

My take is that 'variable' doesn't mean the contract contains an uncertain term. Variable could possibly mean 'uncertain' in some instances but could also refer to 'change' or 'adjustible'.

For a contract to be void for uncertainty I think you would need more than this. The language would have to be vague or imprecise.  You couldn't have an agreement to buy a house but subject to a price to be agreed upon.

One term of the contract could be imprecise but the contract as a whole could still stand. It is also possible that a term could be vague but stiff able to be defined by common practice or some other method. eg you could have an agreement to purchase a house with the price to be determined by the average of two valuations by registered vauers.

With the loan agreements the interest rate is listed in the agreement, but it is subject to change.

That website you listed is a bit of a conspircary right wing type. The letters are appauling.

This letter says the constitution doesn't recognise local government. This is true. But does it mean all local government regulations are invalid? No. It a local government enacted something that is contrary to the constitution then it would be invald – eg. they are going to set up their own tarrifs on trade between blacktown and penrith. This would be contrary to the constitution and be an invalide law.

Are rates state local government taxes? probably. Are the unconstitutional? Possibly, but they are still being charged so there must be cases where someone has challenged a council in charging council rates and they must have lost – otherwise the could be no rates.

Not necessarily Terry. I do know of people who have not paid their rates for years, standing on common law, & there is nothing that the local council could do about it. It is an individual descision & the councils are hardly going to advertise the fact are they? They are not going to stop billing the majority because the minority have cottoned onto their fraud.

People have choices & the more people who choose to stand up for their rights the more it will get noticed. I do not think that there is enough people doing it right now to make a 'splash in the ocean'.

Again it comes back to the people being educated – like anything else in life.

hey all – just to get back on the topic of using VF to buy an investment property…

So, what if I find sellers (not vendor financiers/VF businesses) and I calculate that I my instalment contract payments are LESS or EQUAL TO the potential rental income that I could accumulate by renting out the property to someone else. As a purchaser, could I offer an instalment contract to a seller, and then rent out the place to someone else (and then make a profit on the difference)?

Would I need a special clause in the instalment contract which stipulated that I am allowed to rent out the place to tenant? Or is it implied that I can do this since I will have possessionary/equitable title?

Hi Mattsta,

Typically your vendor finance contract will let you rent it out with consent from the vendor, but your insurance company probably won't let you.

Even the Alliance wrap specific policies do not cover the vendor terms buyer being a landlord and last time I asked they wanted the vendor to be the only landlord and to use a regular landlord policy. A second insurer (a couple of years ago) also insisted that the landlord tenant relationship only exist between the vendor and the purchaser's tenant, which in either case would probably mean a contract rewrite.

That insurer would also only do it on a case by case basis so potentially an expensive new contract might be only good for one deal.

A more practical solution might be a joint venture or assumptive joint venture where you control the property rather than buy it on an instalment contract, then rent it out yourself.  I haven't explored the insurance implications of this, so in my answer is a question to one of the joint venture guys here – Who is the landlord under an AJV and has anyone had a successful claim?

Cheers,

Phil

If the banks have such a monoply like i tell other people go buy there shares then..

Its funny people will always say the banks are making to much money, there fees are to high.

Well buy a share in the company!!!!

Hi Matt

We dropped Alliance about three years ago because of their pricing and unworkable rules.  We now work with a very VF friendly insurance underwriter and what you propose is not seen as a problem by this underwriter.

Sure go conventional but don't be forced down that path by insurance issues because while Alliance's A******* Unity underwriter may be a pain another large underwriter, i.e. V*…, is quite helpful.

Cheers,  Paul