Strata properties could be risky for smsf

[sydprop]

http://www.news.com.au/national/str...-for-smsf-owners/story-e6frfkp9-1226739751992

Thoughts on whether this only applies to directly owned assets?

With borrowing, I thought that the property is purchased by a separate company (different to the company that may be the SMSF corporate trustee) as trustee for a custodian trust with the SMSF as beneficiaries.

If this structure is enough to ensure limited recourse for banks - it should also provide similar protection for being sued by others as owner of the IP?

*Edit: Reworded for clarity

 

[Terry_w]

http://www.news.com.au/national/str...-for-smsf-owners/story-e6frfkp9-1226739751992

Thoughts on whether this only applies to directly owned assets?

With borrowing, I thought that the property is purchased by a separate company (different to the company that may be the SMSF corporate trustee) as trustee for a custodian trust with the SMSF as beneficiaries.

If this structure is enough to ensure limited recourse for banks - it should also provide similar protection for being sued by others as owner of the IP?

*Edit: Reworded for clarity

Nope, all the assets of the trust would be at risk. The custodian trustee is just a bare trustee so the legal owner would be the one at risk and this the the SMSF trustee. This would be then indemnified out of the assets of the trust.

With lending it is different because the loan agreement with the lenders restricts them to the security property itself

 

[Ausprop]

"He said under current legislation all strata owners were liable, but claimants typically picked the people with the biggest pockets."

Terry would proportionate liability for concurrent wrong doers apply here? Is he talking about concurrent wrongdoers here:

"‘‘Do you have a trial in which the strata company is found liable, then a second trial to determine which of the owners in that strata title scheme knew more about the circumstances and should be found more liable than others?’’ he said."

 

[Terry_w]

"He said under current legislation all strata owners were liable, but claimants typically picked the people with the biggest pockets."

Terry would proportionate liability for concurrent wrong doers apply here? Is he talking about concurrent wrongdoers here:

"??Do you have a trial in which the strata company is found liable, then a second trial to determine which of the owners in that strata title scheme knew more about the circumstances and should be found more liable than others??? he said."

Don't know Ausprop. I know nothing of strata laws..

 

[Ausprop]

I'm no lawyer but wouldn't have thought you could legislate away your rights for proportional liability.

On the whole I thought the article was a sad and hysterical attempt to protect the traditional role of advisers in earning comms and trailers.

"If you choose a property that under performs it may set your retirement goals back many years."

yeh good one Einstein - pick any dud and it will set you back many years. Where are the advisers that put their clients into Macquarie structured products... anything to say?

 

[geoffw]

"This has never happened. But it could. There's millions of strata titled properties out there- but the one your SMSF buys could be the one that cops it. Be very very scared".

 

[Terry_w]

Similar applies outside of strata - a stand along house has a roof that needs replacing, the trustee must enter into a contract with a roofer to replace it, a dispute arises and litigation results. Appeals to higher courts etc SMSF loses and the house could be lost.

You could also slip over in the shower and break your coxyx.

Be scared, be very scared.

 

[chilliblue]

With insurance claims, it tends to be a through out some shots and see what is hit.

The one that is normally hit first is the one that has the weakest defence.

If a strata body undertakes it normal due diligence and has clear and concise (and available) files detailing the works that they undertaken for risk prevention and carry the correct insurance, then there should be no worries.

As to contractors injuring themselves on properties; regardless of who they are, check and get a copy of all their insurances and licences and ensure that they are covered themselves before any work is undertaken.

That goes for even someone doing works on your PPOR.

 

[Ausprop]

Similar applies outside of strata - a stand along house has a roof that needs replacing, the trustee must enter into a contract with a roofer to replace it, a dispute arises and litigation results. Appeals to higher courts etc SMSF loses and the house could be lost.

You could also slip over in the shower and break your coxyx.

Be scared, be very scared.

my thoughts exactly