SMSF borrower and guarantor

Our loan documents state that the borrower is the super fund while guarantor is bare trust. Is that correct? I thought the guarantors should be my wife and myself. Thanks

 

no as a super fund is not a legal person and neither is a bare trust

It would be surprising if the documents indicate this though, you are probably misinterpreting it.

Best to seek legal advice.

 

Thanks for the advice, Terry. That is written on the cover page of the loan document while in the actual loan agreement it specifies that my wife, myself and the corporate trustee of the bare trust are collectively referred to as guarantor.

 

The custodian company for the bare trust holds the legal title. It is a guarantor to the fund ...to the loan. This guarantee has LIMITED RECOURSE only to the property held on trust. Nothing more.
The members are also usually guarantors should the asset value not lclear the loan. This takes the non-recourse from the trust and puts the recourse upon the members. Technically it complies with SMSF law. But it means a non-recourse loan always has some recourse. Just not to the fund.

This is why lenders often require members have legal and/or financial advice and sign off they obtained it. To assist legal understanding of what they are signing.