Hi folks. I'm interested in purchasing a property off-the-plan and I was wondering if you could give some advice concerning assignment. I am interested to use the Banker's Guarantee from a bank to secure the property. However, before I decide to do so, I was wondering if I will be legally be able to get the deposit money back (via the assignee) if I decide to sell the property?
I've received conflicting information on this. One real estate agent I spoke to said that I won't be able to get the deposit money from the assignee until after settlement. He said that the assignee's deposit wil be held in a trust account that is set up. I thought this was odd, as it would mean that both my deposit AND the assignee's deposit would be sitting in a bank account until settlement.
However, a lawyer I spoke to said the reverse: that it was possible to receive the deposit money in full from the assignee, instead of having to wait till settlement.
Any advice on the above would be greatly appreciated. Thanks!
p.s I love this website!
I think it depends on the state you are purchasing in and your negotiation skills. Some states allow the deposit to be released if the purchaser agrees. But buyers would be wary in releasing the deposit in case things go wrong – it would be difficult to recover if you spent it and then couldn't settle!
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
Gosh.
That's a complicated and tricky question.
Let me get this right… you want to buy a property off the plan using a deposit bond, and then you want to assign your right to purchase to a third party and then get them to take over your deposit bond, or get a new one?
Hmmm.
A couple of thoughts:
1. Make sure you can assign the right to purchase in the first place. You wouldn't want any recourse against you if the person you assign to doesn't settle.
2. The idea of a deposit bond is that the bank guarantees that you will be able to come up with a deposit on settlement. If you then assign your right, I can't see why you need the deposit bond anymore as the new purchaser takes over that obligation to give a deposit on settlement. That is, when you assign the person taking up the contract will need their own deposit which should then eliminate you.
3. Carefully read the terms of the deposit bond. I doubt they are able to be transferred.
4. Be careful about the stamp duty implications of what you are doing.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hello! Sorry I couldn't respond to both your comments sooner. Many many thanks for your help. As you can see, it is rather complicated an issue isn't it.
1. Make sure you can assign the right to purchase in the first place. You wouldn't want any recourse against you if the person you assign to doesn't settle. Yes, my lawyers have confirmed that I can do this. Before I purchase, I will make sure that I'll be clear of any settlement once I assign the property.
2. The idea of a deposit bond is that the bank guarantees that you will be able to come up with a deposit on settlement. If you then assign your right, I can't see why you need the deposit bond anymore as the new purchaser takes over that obligation to give a deposit on settlement. That is, when you assign the person taking up the contract will need their own deposit which should then eliminate you. Yes, I agree. That's why I was doubtful when the real estate agent I spoke to said he would have to hold the deposits in trust account. It all sounded rather fishy to me. I would expect that the assignee's deposit monies will be held in trust, and not mine. Thanks for explaining how bank guarantees work. Its a lot clearer to me now.
I will definitely look at the stamp duty issue – that's something that I hadn't thought about, and I appreciate that you've brought it to my attention.
Thank you again for all your help. I'm really grateful.
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