Wraps with divorce
- Thread starter Brizza
- Start date
Under most wrap contracts, you no longer actually own the house, so neither of you is entitled to half of the property. Your client owns the house.
Depending on your separation agreement, your ex may be entitled to half the profits resulting from the wrap.
Depending on your separation agreement, your ex may be entitled to half the profits resulting from the wrap.
Wrapping a property gives you two choices as far as your own lending goes:
1. Go through commercial channels.
2. Don't tell them you're wrapping it.
In my opinion option 1 is more sustainable in the long run although the rates and LVRs aren't as generous.
1. Go through commercial channels.
2. Don't tell them you're wrapping it.
In my opinion option 1 is more sustainable in the long run although the rates and LVRs aren't as generous.
Brizza
As Peter has mentioned if you dont tell your lender and as long as the property is a standalone security then they will not find out initially.
Your purchaser or wrappee (I hate that expression) only has a date of possession when he moves into the property with the settlement date being upto 25 years later.
The property remains in your name until that date although the Transfer document is lodged with the OSR prior to the possession date so that Stamp Duty can be paid upfront. No every wrappee will of course do this.
If they are entitled to the FHOG the timing of the payment of this will vary from State to State and can be upto 18 months after possession when the forms are lodged with the OSR.
The wrappee is legally entitled to lodge a caveat against the property but not all do of course.
As Peter has mentioned if you dont tell your lender and as long as the property is a standalone security then they will not find out initially.
Your purchaser or wrappee (I hate that expression) only has a date of possession when he moves into the property with the settlement date being upto 25 years later.
The property remains in your name until that date although the Transfer document is lodged with the OSR prior to the possession date so that Stamp Duty can be paid upfront. No every wrappee will of course do this.
If they are entitled to the FHOG the timing of the payment of this will vary from State to State and can be upto 18 months after possession when the forms are lodged with the OSR.
The wrappee is legally entitled to lodge a caveat against the property but not all do of course.
Brizza,
why don't you do a search at www.austlii.edu.au and search Family Law decisions in either the Family Court or Federal Magistrates Court searching using the words "wrap" and "property settlement"
Not sure what you will find.
why don't you do a search at www.austlii.edu.au and search Family Law decisions in either the Family Court or Federal Magistrates Court searching using the words "wrap" and "property settlement"
Not sure what you will find.
Hi Brizza
As Peter mentioned above, with the exchange of contracts that has taken place during the wrap process, it is likely that the court will decide that you have disposed of the property and the only part of the property that you retain, is the future proceeds from the Instalment Sales Contract (wrap). Therefore I believe the Family Law Court would divide the future proceeds from the wrap as it sees fit.
However, this is just my opinion. I'd strongly suggest that you talk with a vendor finance savvy solicitor about this.
Cheers, Paul
As Peter mentioned above, with the exchange of contracts that has taken place during the wrap process, it is likely that the court will decide that you have disposed of the property and the only part of the property that you retain, is the future proceeds from the Instalment Sales Contract (wrap). Therefore I believe the Family Law Court would divide the future proceeds from the wrap as it sees fit.
However, this is just my opinion. I'd strongly suggest that you talk with a vendor finance savvy solicitor about this.
Cheers, Paul
Just so we're clear on my position here. I'd prefer people go about wrapping in a fully disclosed manner. The finance options are more limited, but the long term gain is substantially better if you intend to turn wrapping into a business (successful wrappers tend to take a business approach rather than an investment approach).
It is unlikely that you'd be caught out by your lender if you didn't disclose it, but it might limit your options in the future.
Your residential lender probably won't accept you're getting a 10% return on the properties you bought last year. A commercial lender might if they can see the paper trail and the business plan.
It is unlikely that you'd be caught out by your lender if you didn't disclose it, but it might limit your options in the future.
Your residential lender probably won't accept you're getting a 10% return on the properties you bought last year. A commercial lender might if they can see the paper trail and the business plan.
Hi there,
On the question of whether you (and your wife) still own the property after you have wrapped it- the title remains with you until your buyer has re-financed out so if your wife's name is on the original contract when you bought it,she will be entitled to half the proceeds of the income that it is producing.
On the question of whether to disclose to your lender or not whether you're doing a wrap when going for a loan-When we were running the Vendor Finance Association of Australia a few years back,my partner Jack did a survey of the various lenders,both 1st tier and 2nd tier,and found that they prefer that the loan was just disclosed as an investment loan otherwise it would required months of deliberation because it would have to be sent "upstairs" to their legal committees.
As was previously stated,if you're running it as a business and going for loans as a business it's different, but you do need to build up a business record and have a business plan first.
Cheers,
Tamar
On the question of whether you (and your wife) still own the property after you have wrapped it- the title remains with you until your buyer has re-financed out so if your wife's name is on the original contract when you bought it,she will be entitled to half the proceeds of the income that it is producing.
On the question of whether to disclose to your lender or not whether you're doing a wrap when going for a loan-When we were running the Vendor Finance Association of Australia a few years back,my partner Jack did a survey of the various lenders,both 1st tier and 2nd tier,and found that they prefer that the loan was just disclosed as an investment loan otherwise it would required months of deliberation because it would have to be sent "upstairs" to their legal committees.
As was previously stated,if you're running it as a business and going for loans as a business it's different, but you do need to build up a business record and have a business plan first.
Cheers,
Tamar
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