Buying property though a self-managed superannuation fund is not as straightforward as buying in an individual’s name. Because of this, it’s wise to allow extra time for settlement.
When buying property through a super fund, the fund’s trust deed must allow for borrowing money inside of the super fund. Some banks have specific requirements for how the trust deed must be prepared, and time is needed for the bank to check the trust deed.
In addition, every super fund purchase is a little bit different, and unexpected complications can occur – adding extra time to the settlement process.
For example, in a recent settlement case, our client encountered several conflicting pieces of advice from different professionals.
Our client consulted their accountant before making an offer, who gave them one view as to how to structure the purchase. Upon speaking with their bank manager, our client was given different advice on how the bank wanted the purchase structured. Our client proceeded as per the bank’s advice.
After making the offer, however, the bank requested that the client make changes to the structure of the purchase. For finance to be approved, they required that the trustees be changed to a corporate trustee to better protect the interests of the lender. This delayed finance approval and pushed the expected settlement date back. In addition, our client had to seek further advice from their accountant and lawyer.
To avoid delays that might arise from super fund complications, allow extra time for settlement when the buyer is purchasing through a super fund. I recommend allowing at least 42 days for finance approval and another 42 days for settlement.
In addition, buyers should be prepared to budget for the extra legal and accounting costs that might arise if they encounter any complications. By factoring in an adequate amount of time and money, you increase the likelihood of a smooth and hassle-free settlement.
Image by Alex Proimos via Flickr.