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  • charliefaddoul
    Participant
    @charliefaddoul
    Join Date: 2022
    Post Count: 0

    Hi everyone,

     

    I am having trouble understanding the technicalities around Purchasing a property using a trust.

     

    I just wanted to confirm, as the trust is owned by the company, when I apply for a loan, do I take the loan out in the name of the company that holds the trust or the trust itself?

     

    Any help understanding this is much appreciated.

     

    Thanks,

     

    Charlie

    Profile photo of financebrokerfinancebroker
    Participant
    @financebroker
    Join Date: 2022
    Post Count: 0

    Hi Charlie,

    I was here around 10 years years ago, however have just created a new account. Yours being the first post I’ve read.

    Based on your post, I would need to make some assumptions… but here goes…

    I have a feeling you are referring to the trustee e.g. the trust has a company acting as trustee. The trustee is not the owner of the trust but more of an administrator, managing the trust for the unit holders or beneficiaries. Having a company as trustee is very common when banks are lending to trusts.

    Generally. A loan application would be submitted with the company as the applicant (acting in its capacity as trustee). There are then usually directors guarantees and sometimes guarantees from beneficiaries.

    Hope that’s helps :-)

     

     

     

    charliefaddoul
    Participant
    @charliefaddoul
    Join Date: 2022
    Post Count: 0

    Thank you Finance broker. This helped heaps!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I just wanted to confirm, as the trust is owned by the company, when I apply for a loan, do I take the loan out in the name of the company that holds the trust or the trust itself?

    A company cannot own a trust. A company might be acting as trustee for a discretionary trust. The company would own the property, the company would be the borrower with the director of the borrower giving a personal guarantee. The lender would want the company to enter into the contract as trustee of the trust and have a right of indemnity out of the trust assets. This will mean the company’s personal assets, the trust assets and the assets of the guarantor are exposed if things go wrong with the loan.

     

     

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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