As property prices have boomed in Melbourne for the better part of a decade, first-home buyers have had to become increasingly inventive when it comes to getting into the market.
Whilst the various State and Federal Governments have provided some great grants and concessions to homeowners, sometimes parents or other family members or related parties take matters into their own hands by buying property in trust for someone else.
This might typically happen in a scenario where a prospective purchaser has enough cash to cover the deposit but is struggling to obtain finance from a lender.
Consider the following scenario….
Bob has found a property he would like to purchase. He has built up a 20% deposit, however, he launched his business only four months ago and does not have the financial history required to get the finance he needs to complete the purchase.
Bob asks his Dad, Terry, to buy the property using Bob’s deposit and guarantees he will make the monthly repayments. Terry agrees and buys the property in trust for Bob.
In this scenario, Terry is the ‘apparent purchaser’ and Bob is considered the ‘real purchaser’.
Two years pass and Bob’s business has progressed well. He has made all his required monthly payments, allowing Terry to service the loan. Bob can now obtain finance and would like to transfer the property into his name from Terry.
Under the Duties Act, this transaction could be exempt from relevant duties.
To achieve the exemption, there are a number of documents that need to be supplied to prove that the agreement between the real purchaser (in the above scenario, this was Bob) and the apparent purchaser (in the above scenario, this was Terry) existed.
Conveyancing lawyers in Melbourne may also need you to prove that:
- The real purchaser could not obtain finance
- Bank statements that prove the real purchaser paid the deposit
- Bank statements that prove the real purchaser paid the monthly repayments
- Statutory Declarations that apparent purchaser never used the property for negative gearing or tax purposes
Often, Tick Box Conveyancing is referred these matters in residential conveyancing in Melbourne at the point where the real purchaser is ready to transfer the property into their name from the apparent purchaser.
It is important that mortgage brokers, real estate agents and any other property professionals can recognise that this transaction is taking place and that a duty-free transfer may be possible.
Of course, Tick Box Conveyancing can also help before the purchase is made by ensuring the agreement between the real purchaser and apparent purchaser is documented clearly.
If you would like to understand more about how Tick Box Conveyancing can help you or your clients with apparent purchaser transfers, please get in touch with us today to speak to a professional conveyancer in Melbourne.