At settlement, does it matter who's name the cheque is in that pays for the remainder of the property??
Is there any possible tax/ pro's or con's for it NOT to be paid out by someone else's chq, other than who's name (company name) will actually own it?
Eg: If ….x……. will be the legal owner of the property, but the chq from………y…………… is used to pay out the property at settlement. Will this matter??
Thanks in advance.
At settlement the Vendor Solicitors will direct the purchaser to draw the cheques to whoever they are instructed too.
Obviously, where the property is subject to a mortgage the lender will want this discharged and therefore a cheque will be drawn in their favour but the balance net of costs can be draw to anyone.
In saying this of course it has no bearing on Tax liability payable and if fact if it deposited in an account held by someone in receipt of government assistance, pension etc may actually be of detriment if consider an asset.
Richard Taylor | Australia's leading private lender
There may be legal issues.
eg. If you buy a property and ask me to make a cheque out for part of the purchase funds, I could argue that I have an interest in the property – I paid for part of it after all!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks guys.
Hi Misty,
Buyer solicitor usually organises the payments. So the steps are:
1. X (buyer) gives his account number (where X's deposit is) to his solicitor.
2. Buyer solicitor organises what money goes where as per Vendor Solicitor's instructions. See Richard's response above.
3. Vendor solicitor goes to Bank1 (where the old mortgage is) to pick up the title deed. For Bank1 to give the title deed to Vendor solicitor there must be sale contract and solicitor's signed receipt of the title deed.4. Bank2 (where your funds is) issues the cheques as per buyer solicitor's instructions and give them to the buyer solicitor.
5. Bank3 (where your new mortgage will be) issues cheques as per required. Money to Bank1 is usually electronically transfered rather than via cheque.6. At a mutually agreed time, Buyer solicitor meets vendor solicitor and bank3 and exchange documents. The cheques go to vendor solicitor, title deed goes to the bank3 and buyer solicitor gets nothing.
So for X to use Y's money to buy property, here's what needs to happen:
Buyer solicitor needs to get legal authorisation from Y that he can access Y's account. No personal cheque is allowed lest it bounces and fails the exchange. That legal authorisation must also be acceptable by Y's bank. Whether Y gets ownership or not is not relevant as it could be a gift. His signature on the authorisation letter is more important.This is very complicated. Most likely thing to happen is buyer solicitor will ask Y to directly transfer the money into X's bank account and the process works as explained above.
Hope this helps,
Cattleya.Cattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
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