I'm thinking of buying and renovating a unit then selling 30% of the property to an investor. Has anyone tried this or does anyone know of this method.
Think we answered this question on a similar post you placed.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yes that you did, but thank you for the consideration.
Sounds problematic.
How can you or them protect yourself? They couldn't get a loan to purchase their share without you guaranteeing the loan – and vice versa.
What happens if their spouse/lover/mistress puts a caveat on the property just as you were thinking of selling?
What if one party dies?
What if one party goes bankrupt?
What if one party wants out and the other doesn't?
If you really do want to do it maybe consider using a unit trust to own it so that title doesn't need to change and you just have to transfer units across to a new purchaser
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
Yeah I know all those things. Basically as far as I know they can get a loan for to buy into a property however it has to all be under the one bank so that gives the bank security. At the moment I haven't worked out any plans for if one party goes bankrupt but I am aware of the risk. This has nothing to do with spousal or marital issues, it's really more of getting an additional investor.
It might be similar for instance if you have a succesfuly growing business which has grown significantly in value, you find an investor to give you a large sum of money for a share and they become a partner so now you have some money to invest otherwise while still being the primary business owner.
If they need a loan to get into this property then you will be jointly and severally liable which means if he stops paying his share you will need to start paying or the bank will take back their security. The bank will then sell it and you will be left with any left over if any – jointly with the other party. If there is a shortfall the bank will sue you, him or you both. Once they have a judgment they will go after whoever has the most assets.
It may have nothing to do with marital issues now, but what if 5 years from now he takes a gay lover and their relationship sours after 2 years. The lover can place a caveat on the house to prevent you selling or increasing the loan. This could tie up the property for years.
There is little chance this will work smoothly
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
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