A few days ago, the sale of the coastal mansion at Vaucluse, which was sold for A $40 million, reportedly belonged to Liu Qiangdong and was held on behalf of Ms Huang, the wife of Yonghui`s chairman.
Of course, the representative is just anecdotal, so take a look at this real case:
Recently, Mr. Wang, an overseas official, coveted a three-bedroom apartment worth eight hundred thousand Australian dollars in Brisbane, Queensland, and found Ms. Li, an old classmate with permanent residence in Australia in Sydney, who proposed that she should be the actual investor. Ms. Li as the agent to replace Mr. Wang bid to buy.
Subsequently, Ms. Li, the agent, "bought" the property and, with the help of lawer, successfully completed the delivery and acquired ownership.
At this time, Mr. Wang`s wife learned of the behind-the-scenes situation immediately, the more anxious, the more worried, more and more contact with us for consultation.
This is a typical example of a non-Australian investor buying a house by name.
The so-called "hang-up name to buy Australian housing," refers to the actual investor to borrow the name of other people to buy Australian real estate, and in the name and identity of others to register the ownership of the property.
In this case, the agent does not actually contribute, but still has the ownership of the real estate on the law; the actual investor does not have the ownership of the property, but actually contributes to the investment behavior.
In today`s article, we summarize the following six key law knowledge points, hoping to help or alert more "actual funders" and "custodians" who want to understand or face such problems.
1.FIRB rules on Visa and identity of buyers
For most second-hand homes, Australia`s overseas Investment approval Board (Foreign Investment Review Board) has set a set of thresholds to limit direct purchases by overseas buyers.
FIRB rules that overseas buyers are generally prohibited from buying homes already built in Australia, but temporary residents in Australia can apply for a second-hand home and can only be used for personal use, but are required to sell it when their visa expires in leave Australia.
Therefore, without Australian identity, Mr. Wang can only turn to Ms. Li as a "buyer" to buy the property.
It should be noted, however, that such escrow may itself be suspected of concealment or deceit from the government agency, and even more likely to face the prosecute of the government agency (including criminal proceedings).
This is because the FIRB has expressly prohibited the concealment of the identity of an overseas investor or the holding of a property on behalf of an overseas investor to evade the application fee for the purchase of a property by an overseas person. The violator will not only be fined and forced to sell the property. There may be criminal proceedings if the circumstances are serious.
There is no doubt that this is a very high risk of irregularities for both the agent and the actual owner of the property.
2. First-time Home purchase subsidy and Stamp Duty reduction
Australia`s federal government and state government have clear rules for buying properties for overseas investors. In general, overseas buyers must pass the approval of overseas applications and pay a certain amount of application fee.
With some states government charging 7% / 8% more stamp duty on overseas buyers than local buyers, it is not hard to imagine how much demand foreigners want to buy in Australia on behalf of others in order to circumvent policy costs.
In the above case, Mr. Wang, as an overseas person with certain assets, is usually unable to apply for the first time home purchase subsidy or stamp duty relief granted by the state government, while Ms. Li, the agent, is likely to meet the following conditions. Mr. Wang, the actual investor, received the following concessions:
Application conditions for initial Home purchase subsidy (A $1-20,000):
1) must be an Australian permanent resident or citizen;
2) the buyer has never owned a property in any state of Australia;
3) the buyer is 18 years old;
4) A new house with a value not exceeding A $ seven hundred and fifty thousand must be purchased.
Application conditions for first-time Stamp Duty reduction Policy:
1) the buyer has never purchased a property in any country;
2) the buyer has never applied for the first-time home purchase subsidy;
3) upon delivery of a new house, he shall reside in the premises for a continuous period of 12 months or more;
4) the buyer must be over 18 years old.
3. Mortgage and repayment of Bank loan
Since 2016, loans from overseas have been tightened and even closed.
As a result, access to loans through Australian and local-income agents has also become an option for some actual down-payment providers. The actual investor will often agree with the agent that all loans will still be repaid by the funder.
So, if Mr. Wang, the actual investor, fails to meet his repayment obligations properly, it will affect the bank`s credit rating and reloan ability of Ms. Li, the agent, or force Ms. Li to repay the loan.
4. The Depositary of the "Depositary Agreement" and the obligation to contribute to the interest of human rights
There is a "proxy agreement" for both parties to buy a house under their name, and there is sufficient evidence to prove that the actual payment of the down-payment, mortgage and other related funds of the property is actually paid by the investor, Should houses registered in the name of the agent be considered to be of a subrogation nature? Is the ownership of the house owned by the funder, not the owner?
Australia implements the Torrance registration system, the core of which is "registration effectivists".
That is, after the "registered name purchase", as the representative of the registered rights people, Ms. Li once turned back, even if the actual investor Mr. Wang left sufficient evidence to prove the existence of the "registered name purchase" fact, will also face a cumbersome and long law proof procedures;
What`s more, if there is no proof of the existence of a "registered home purchase", Mr. Wang`s own rights will not be guaranteed, resulting in the loss of money and property.
Under the Torrance registration system, Ms. Li, the contemporary owner, decided to resell the property without the consent of Mr. Wang, the actual investor.
If the new buyer is a bona fide third party, and if a change of title has been registered, Mr. Wang is no longer likely to request the cancellation of the transaction and the return of the property right.
Bona fide third person: in a defective law relationship, a person who, outside of the defective law relationship, arbitrarily does not know that the law relationship is flawed and does harm to either side of the defective law relationship. The damage committed by the third party was not intentional.
At this time, even if can prove the existence of the "registered name purchase" fact, but also can only pursue the representative Ms. Li`s corresponding responsibility.
In addition, if there is a future dispute between the actual investor and the custodian in relation to property rights, the actual investor will be very passive:
Since the property in question is registered in the agent`s name, the court will require the actual investor to provide evidence to prove his claim, which is very difficult to prove.
Even if the actual investor can provide the house purchase voucher, the agent can also claim that the other party`s investment behavior belongs to lending behavior, in this case, it is difficult for the actual investor to protect their income in the value-added part of the property.
If the surrogate is the family of the actual buyer, the agent may even claim that the act of capital contribution belongs to the act of giving, and the actual investor may not even be able to pay a penny for it.
Finally, a series of issues related to the custodian, including the bankruptcy resulting from the deterioration of the financial situation of the agent, the need to pay off the debts of the property under the name of the agent, the inheritance of the estate of the surrogate`s accidental death, and the division of the property involved in the marital status of the agent, The conflicts between the agent and the tenant`s neighbors, the bank debt caused by the devaluation of the property, and so on, may also cause the actual investor to be very passive.
5. The problem of the relationship between the seller, the agent and the investor law
A registered home purchase situation generally has a dual character, involving the following two law relationships:
1) the borrowed nominal law relationship formed between the lender (the agent) and the person who does not have the qualification or condition for buying a house (the actual investor);
2) the law relationship between the loaner (the agent) and the real estate seller.
In general, the actual investor and the representative owner are usually more closely related, and there are even more relatives in the "registered house purchase" disputes heard by Australian courts, so the two sides are based on trust. Many unsigned agreements or agreements are not clear.
However, it is easy to cause law dispute because there are many unpredictable factors in the loaner purchase itself.
Therefore, before considering "registered home purchase", it is important to ensure that both parties obtain independent and adequate professional law advice.
6. Application of "Depositary Agreement" in Australian House Circle
Although the "escrow agreement" is accompanied by many risks and potential violations, in practice, many buyers still need a conformable "proxy relationship" to invest due to certain restrictions.
Therefore, it is very important to draft and apply the agency agreement in the purchase of overseas real estate.
