Flips, Flicks and legal hot water…???

Luke,
When yo say a “flip” as in, onsell a property either before you settle or else settle with a view to sell again immediately, the as far as WA goes ther is no licencing requirement.
But you will be liable for stamp duty on the purchase.
As far as a licence goes, you may be referring to vendor financing or wrapping, which is one of the strategies that Steve uses, in which case, for WA you will neded a Credit Providers Licence as issued by DOCEP.

KP

Hi there,

well my fellow investors and I have done probably close to 40 flips in the last year, and the way we do it is to put a contract subject to due diligence within 20 days on a property in our own names (perfectly legal) and/or nominee. (perfectly legal).

Then we advertise the property to our clients along with pictures, what we reckon, what we’ve found out, good points, bad points etc etc, and if someone wants the deal we assign the contract to them with a (legal!) document.

Strictly speaking the deal is in our name still (despite the assignment document) until it goes to unconditional. It’s at that point that it fully passes to the client legally absolving us of the obligation to settle and passing that on to the client. So we have to watch the deal and make sure the client is doing all the stuff they are supposed to do. The client advises us that they are going to go ahead or not, and then we advise the vendor that we will go unconditional, and the new principal is our client. We actually put a clause in the contract that the vendor signs off on that says the vendor accepts that we may assign the deal.

As far as I am aware we are not actually buying on anyone’s behalf but our own, and we are assigning the deal to someone which it is already contractually agreed by all parties that we are allowed to do.

Seeing as we have done so many deals now a large amount of lawyers have seen our deal structure and give or take the odd lawyer that wants an additional tripartite agreement drawn up between us, the vendor and the client, all seems to be legal and above board. We are only doing deals in NZ though.

if we were doing them here I would expect our Australian property lawyers to help us make sure we are complying with the law, just as our NZ ones have done.

cheers-
Mini

joy to the world

You assign for a fee.

Terryw
Discover Home Loans
North Sydney
[email protected]

wow – that’s awesome! no wonder the hype about NZ! In WA there is no escaping the stamp duty… if a nomine isn’t listed at the time of the sale, then it isn’t happening. and no you can’t list the telephone directory as nominees; I believe it is limited to approx 10 names.

John – 0419 198 856

I used to sign them up as (for example) “minimogul corporation and/or nominee, or as directed at settlement”

but I have since learned that the ‘as directed at settlement’ is not necessary.

HOWEVER. Our original lawyer said that the party that goes unconditional (the nominee) should be the identical name of the party that settles otherwise it gets messy.

So when we get the assignment document from our clients we assign it to the actual trust/person/company/LACQ/whatever that is going to settle the deal.

And yeah no stamp duty in NZ. The way you could work around that kinda thing in WA is the old way I used to do it, find a deal, negotiate it to a verbal, present to client and then the client would sign up in their own name. the only trouble is that sometimes you do the work, get the awesome deal, and the client frigs around and then finally decides to go for it but the deal is already gone. Putting a contract on the property was the way we found best to ensure we actually HAD the deal to offer first. But there’s a lot more work to actually get to contract stage rather than just deal researching so you have to charge more.

cheers-
Mini

joy to the world