Buying Property into a Rental Trust that has a Corporate Trustee

[Guildor]

I am buying a property for a Rental trust that has been set up to hold all my investment properties.

The Trust has a Corporate trustee.

1. What name is used on the S&P: The Trust name or the Corporate Trustee name ie. "The ABC Trust" (trust) or ABC Limited (corporate trustee).

2. The mortgage documents are under what ?

[CJ]

Why not cover both with ABC Ltd as trustee for ABC Trust.

However, i beleive the land transfer office and banks (for mortgage purposes) require the trustees name to be used, not the trust name.

[Dean@Massiveaction]

Correct wording is "ABC Ltd as trustee for ABC Trust" for a trading trust.
For buy and hold it probably isn't critical from a tainting and GST point of view but it is the correct entity to use on the S&P.

[Wayne]

Why not cover both with ABC Ltd as trustee for ABC Trust.

However, i beleive the land transfer office and banks (for mortgage purposes) require the trustees name to be used, not the trust name.

A trust can't own property - the Trustees do. This is why a Trust company is handy otherwise the property changes ownership everytime there is a change in Trustee whereas a Trust Company can change directors at will without the property ownership changing.

[Green Fish]

All true.

The registered owner of the property must be the trustee.

A trust, unlike a company, is not a separate legal person, capable of being the legal owner of property. (Yes, the IRD gives trusts a separate IRD number, but that is only done for administrative convenience.)

[fpl]

Should be the Trustee. However, the lenders sometimes see this different

Also depends on what your preference is.

[Guildor]

"ABC Ltd as trustee for ABC Trust" for all trusts then

My solicitor told me not to buy property under the name of the company, not to use "ABC Limited".

So this is wrong then.

The "Corporate Trustee" should be on the S&P.

The title has the correct name "ABC Limited" and the bank documentation for the mortgage is also correct, just the S&P document that is wrong, is this a problem ????

Also, I throughout all the paperwork asscoiated with the purchase, there are some spelling mistakes, the name of the trust has 2 spelling versions throughout, is that a problem ?

[Dean@Massiveaction]

My solicitor told me not to buy property under the name of the company, not to use "ABC Limited".

Yes your lawyer is wrong.

Also, I throughout all the paperwork asscoiated with the purchase, there are some spelling mistakes, the name of the trust has 2 spelling versions throughout, is that a problem ?

If the vendor wanted to get out of the sale yes this could be a problem. It would take a particularly obnoxious lawyer but.

[Green Fish]

There shouldn't be any problems.

As for the spelling errors, do they create any uncertainly as to who has to do what? If not, no problem.

As for the ASP, did the directors of the corporate trustee sign? If so, there should be no problem. In effect, the company signed the contract, in its capacity as trustee. At settlement, the trustee is entitled to require that it receive a transfer of title.

The point is that a buyer under an ASP has always had the right to specify the entity to whom the title will be transferred. For example, a couple are looking to buy, and while the husband is overseas, the wife finds the perfect house and sign an ASP in her name alone. At settlement, she is entitled to require that the title be transferred to her and her husband, even though the husband never signed the ASP.

[Dean@Massiveaction]

However if the husband hates it and the wife signed on behalf of Mr and Mrs buyer then his lawyer can use that to cancel the contract, off to court everybody goes.

[muppet]

Does that happen much, Dean?

[Dean@Massiveaction]

Since things turned to custard, ALL THE TIME!!
it is critical that your agreements are 100% correct these days. I am dealing with this a lot. There are countless loopholes in agreements that everybody reasonably ignores, but now that the markets are in chaos there are plenty of lawyers out there terminating contracts on any technicality.
The recent RE changes are heading us down the Aussie path where it is almost illegal for a punter or an agent to fill out an agreement, it has to be done by lawyers because the contracts are subject to frequent litigation.