Hi to all,
ASIC has granted us ACL a year ago whilst we were actively conducting Vendor Finance business for 5+ years in Sydney.

We were also assisting people in applying and receiving their ACL with ASIC in the last 12 months and managed to process over 70 ACLs as ASIC lodging agents Australia-wide. 

Our mentors were Rick and Jane Otton to whom we owe our deepest gratitude in changing the way we live our lives.

Firstly to clarify Australian Credit License (ACL) question that has been repeatedly asked in this thread.

Recently enacted legislation National Consumer Credit Protection Act 2009 (Cth) (the Act) has introduced new licensing regime which is in force since 01/01/2011.

Australian Credit License is required for businesses that are involved in credit activities provided to consumers. Alternatively a person or an organisation which is involved in a credit activity (as a business) may become a Credit Representative under a licensee.
 
Otherwise, there are hefty penalties imposed.

For more info on conditions and how to apply for ACL please visit http://www.asic.gov.au/credit .

The real question which has been asked is how this licensing regime impacts Vendor Finance industry including strategies taught by Rick Otton and others.

Answer to this question is not as complicated as it looks.

If there is a credit contract involved somewhere in a transaction where the end consumer obtains a credit (of some kind) it would most likely be regulated under the Act.

These are the usual situations where a financier provides a credit:

• deposit finance
• land or goods payable on installments
• credit-related intermediary services (like mortgage broker or JV partner),
• secured and unsecured personal loans
• credit cards
• commercial leases etc.

'Rent-to-own' transactions have in their core an Option to purchase (a property). Please note that there are multiple types of Options (lease option, reverse option, assumptive option, put and call option etc).

The common thread for all of the Options above is that they ARE NOT credit contracts. Hence the current interpretation by ASIC, government bodies and several large legal firms is that Rent-to-Own do not fall under this legislation.

The main reason for this outcome is that a consumer is not locked into any credit contract and is allowed to terminate his/her option (except for put and call option) without further liability.

In summary: if one conducts their business by exclusively selling properties on an Option (i.e. Rent-to-Own) they would require neither to be licensed nor to become a representative of a licensee.

Note: the relevant legislation is subject to frequent amendments and changes so this position may be revisited in the future.

And of course if in doubt: please seek a legal advice or call ASIC!

BTW as an accredited mortgage broker I am happy to say that there are few lenders who would finance of the back of a Vendor Finance transaction. We have done this several times in the recent 2 years however I would leave this topic for different discussion.

All the best and many happy deals!

Jovan Sarai
Yes Homes Pty Ltd
[email protected]

Does he really need $100k every year?

Hi ong3232,
we have a house in Pemulwuy/Greystanes, Sydney available on Rent2Own arrangement.

Please follow this lonk for more info..
http://www.owner.com.au/phototour/listing_phototour.cfm?listingid=40189&sellerid=32963#

Regards,
Joe
0450 098 837