Joint purchase: half cash from me, half mortgage from her

Discussion in 'Legal Issues' started by AusTones, 3rd May, 2018.

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  1. AusTones

    AusTones New Member

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    Hi there,

    Basic question: Is there a way my partner and I can buy/build if I pay half in cash and she gets a mortgage for the other half.

    Background: Since 2010 I have owned my house outright, unencumbered and title released. Since 2013 I have suffered 2 illnesses, back-to-back, and could not work in that time. Personal debts went unpaid and my credit rating is completely shot. I am permanently employed again and have paid back most of my debts but still have a huge one outstanding which is now 5 years old and I never made a payment on it. I basically own a house that I can't do anything with as I will be declined for finance.

    ps both of us living in my house is not an option as it's leftovers from my previous marriage which I bought off my ex-wife.

    Is there any possible way that both of us can move forward and get a property together? I'm trying to avoid giving her $450,000 and putting the house solely in her name. Is that the only option? Are there protections I can put in place in case the relationship goes sour? It's not about trust, it's about protecting me and my childrens' future.

    Any help/advice would be greatly appreciated.
     
  2. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Welcome, this is an excellent forum and you will learn lots here.

    I leave it to the brokers to discuss Pepper or the other non-conforming lenders.

    Have you thought about looking in to if you can get the default removed? I have a credit repair section at my firm (employ a couple of specialist lawyers) and we get a huge amount of defaults removed, even where the debt is still owing.

    The creditors have a large amount of legislative requirements before they can list a default on your credit rating, most simply don't comply and list. My guys then get a full copy of your file and spend hours digging through it looking for a fault, they find a fault and then ask for it to be removed. Sometimes the creditor replies, sometimes we fight like anything. This week we got one off where the creditor said no on 7 different occasions, we took them to the ombudsman and they had to remove, got fined as well and FOS are now determining compensation (their invalid listing caused loss, even though the debt was genuine). My guys do all of that for a single fixed price.

    If you go down this route be aware that there are only 3 law firms in the country that do it, but there are a whole heap of unregulated "agencies". The largest of which had a judgement handed down in the federal court last week and are paying fines and compensation of $1.7m. They charged about half our fee, but didn't actually do any work, used fake testimonials on websites and much much more.
     
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  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The problem is that if a property is jointly owned, both owners would need to be on the loan in some capacity.

    The solution would be to give a security guarantee to the loan, rather than to be a joint borrower. It's been a while since I did this, but overall it should be fairly straight forward. There's quite a few lenders that don't go into much detail about the guarantors financial position.
     
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  4. Trainee

    Trainee Well-Known Member

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    How do you manage to have a huge debt your not paying on, and they havent come after your house?
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    By having interest only repayments.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Great question.

    For tax purposes typically it doesnt matter who pays what expense. If its joint tenancy or 50/50 tenants in common all income and costs are split equally.

    However, there is a exception. If one person borrows and the other doesnt then it possible the borrower will have a deduction for interest but you will not. So all costs OTHER than interest may be 50/50.

    The problem will be with the lenders. If your partner uses other property as security its no big issue but if she uses the IP as security then the lender will likely want both property owners on the loan. So the loan is joint and then its 50/50. And your credit issues would be a problem.

    You could seek legal advice about lending the funds to her. The loan would need to be carefully maintained to avoid it being unenforceable. Your loan to her could be a form of asset protection. Its not clear if you are discussing sale of half to her or buying a new property and how that works. Problem that may create is she would pay you interest (assessable) but not get a deduction. If you plan to move out of the old home maybe if she bought 50% it could have tax benefits if its then a rental and your half may be +v geared and hers -neg geared. Duty may apply. Lawyer would address that.
     
  7. Brady

    Brady Well-Known Member

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    I've done a reasonable amount of these for clients.

    CBA Property Share - You put in cash for your half, she borrows for her half. Property is owned in joint names, you would have to provided a security guarantee as the property is owned in joint names. Given that you have your own property freehold there shouldn't be too many questions around your financial position.
     
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  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    This debt may become unenforceable in a years time - you will still owe it, but they may not be able to sue you to recover. This will depend on a lot of things though
     
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  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Do you have the cash to pay for half? If you do you could let her be the legal owner, you fund your share in cash and she borrows. Get legal advice on rebutting the presumption of advancement so that a resulting trust will 'result' - you will be deemed to be 50% beneficial owner.
     
  10. JetstreamVic

    JetstreamVic Well-Known Member

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    @RPI Gee, your business model conflicts me.

    Whilst I admire the tenacity of your workers, it really frustrates me that you are able to get people off things, that they genuinely owe.

    It’s very similar to the bottom feeding criminal defense lawyer scum that get guilty people off things on stupid technicalities.

    I wonder how you would feel if Jetstream84’s team was able to ‘get one off’ a debt, and that debt was from Certus Legal Group, for a substantial amount of money.

    (I’m not a lawyer btw)
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I imagine It is not getting people off but getting unlawful defaults and judgments from credit reports.
     
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  12. JetstreamVic

    JetstreamVic Well-Known Member

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    I would have no issue with defaults being removed that have been erroneously added.

    I would suggest that some of these ‘unlawful’ defaults, were still actually incurred, but there was a procedural stuff up, that is then exploited to remove the default
     
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  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    id suggest that a security guarantee isnt going to fly if the credit file is toast.

    The legal beagles at any lender would be concerned tht their security may have a future claim on it

    ta
    rolf
     
  14. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    We don't get people off the debt, they still owe it. The creditor is still free to chase them for the debt.

    In 99% of cases the creditor has been too lazy to comply with the regulations to list the default so we get the listing removed off the credit file.

    Don't do criminal and never would as don;t deal with scumbags, let alone trying to get them off. BUT many criminal defence lawyers argue that it is about keeping thing in check, if police need to comply with procedures and evidence then much less chance of innocent people getting done.

    I also structure people so that if things go bad they don't lose everything, only things in that entity or that name. Is that also wrong? Under a correct structure you could borrow $1m in your name and have $1b cash sitting in another entity and the creditor couldn't touch it.
     
  15. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Spot on. The creditor broke the law by listing it without complying in the first place. Defiant creditors who have done wrong but don't fix after we tell them where are then taken to the relevant ombudsman. The ombudsman then usually writes off the debt and fines the creditor for the breach of law. One of our current ones, ombudsman is currently determining how much compensation to pay to our client on top as their unlawful conduct directly cause client significant losses.
     
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  16. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    But it is not a procedural stuff up. It tends to be the entire organisation saying I don't need to comply with the laws and we will just list everyone, in anyway we want, with complete disregard for the law.

    You could come to my guys with some defaults and they will say that it is extremely unlikely we can get them removed because the company in question actually bothers to comply with the law. If you wanted to try then they would get you to accept in writing that the chances are low but would still go looking.

    Again, nothing changes the fact the debt is owed, bar if the creditor leaves it so long that they can no longer enforce collection of the debt.
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Unlawful is why we have a Royal Commission tearing many people a new one. I see no problem with the principle that you cannot lawfully earn from a breach of law. I wished laws allowed a fixed or unfixed limit to suits or claims for loss. It would limit poor advice
     
  18. JetstreamVic

    JetstreamVic Well-Known Member

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    I’m never going to win in argument when people make money from exploiting loopholes.

    I would have no issue if your team said ‘hey ABC Bank, my client owes $5k, and it appears that you have also erroneously entered a default against them due to X reason. Let’s make a deal, you remove the default, my client will pay the full amount back and we call it a day’

    However, in real life, I imagine that a loop hole is found, the default is removed, the crediter doesn’t get their money back.

    3 points from here.

    1) scumbag who incurred the debt walks away scot free
    2) poor creditor misses out on everything
    3) scumbag lawyers back themselves on the back, for getting their client out of their obligations....... oh and they tut tut a company that hasn’t followed the rules, whilst accepting payment from their client who, ironically, also didn’t follow the rules (of their agreement).
     
  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What about the situation where someone had moved houses, didn't receive a statement of claim and ended up with a default judgment. This judgment is preventing them from getting finance.

    Should they attempt to remove it or wait 5 years to borrow again.
     
  20. JetstreamVic

    JetstreamVic Well-Known Member

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    They should call the creditor, explain their situation, arrange payment of monies owed and have the default removed.

    It is possible for all parties to have a win
     

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