Bare Trust Conveyancing and Settlement

The conveyancing side of an SMSF purchase, where a custodian buys the property and holds it on a bare trust until the borrowing is repaid.

  • Custodian named correctly on the contract before exchange
  • Deed stamped in the right order for the state
  • Settlement completed in the custodian's name
  • NSW, VIC, QLD and WA
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What this covers

Conveyancing where the buyer is a custodian, not you

On an ordinary purchase the person who signs the contract is the person who ends up on title. On a borrowing SMSF purchase they are different. A custodian company buys and holds the property on a bare trust, while the fund holds the beneficial interest and makes the loan repayments. Every step of the conveyance has to reflect that split, from the front page of the contract through to the transfer lodged at settlement.

This page is about the conveyancing and settlement work. If you also need the custodian company incorporated and the holding trust deed drawn, that sits on the bare trust setup page.

Bare trust and custodian setup

Where it differs

6 ways a bare trust settlement differs from an ordinary one

The name on the contract

The custodian buys, not the fund: the contract names the custodian company in its capacity as trustee of the bare trust. Naming the fund or the members instead causes most of the trouble we see.

The deed must already exist

Timing is not flexible: in most states the holding trust deed has to be executed before exchange. A deed dated after the contract can be treated as a separate dutiable transaction.

Stamping runs in a set order

Deed, then transfer: the sequence and the evidence required differ by state, and getting them out of order can mean duty on the same property twice.

The lender is a third party

LRBA lenders have their own pack: their documents, their security, and often their own form of deed all have to be reconciled with the contract before settlement can be booked.

More parties to coordinate

Fund, custodian, lender, accountant: a settlement that would ordinarily involve 2 sides involves 4 or 5, and each has documents that have to arrive before the date.

It is not the last transfer

There is a second one coming: when the loan is repaid the custodian transfers to the fund. What is drafted now decides whether that later transfer is nominal or expensive.

Contract already issued?

Send it to us

Process

From contract to settled, step by step

01

Contract checked before signing

We confirm the purchaser wording, the deposit arrangements and any special conditions that conflict with how the fund has to hold the asset.

02

Structure confirmed with the lender

The custodian, the deed and the loan documents are reconciled so nothing is discovered at the last minute.

03

Exchange

Contracts exchange with the custodian as purchaser and the deposit paid from the correct account.

04

Searches and due diligence

Title, planning, rates and any strata records, exactly as on any other purchase.

05

Stamping and lodgement prepared

The deed and the transfer are prepared and stamped in the order your state requires.

06

Settlement

Settlement is booked and completed, funds flow from the fund and the lender, and the transfer is lodged in the custodian's name.

A note on terminology

Settlement agent, conveyancer or solicitor

These words get used interchangeably and they are not the same thing. In Western Australia the person who handles settlement is usually a licensed settlement agent. In the eastern states it is usually a conveyancer or a solicitor. All 3 can move a property from one owner to another.

The difference matters on an SMSF file because the questions that arise are legal questions, not process questions. Whether your deed works, whether the sequence exposes you to a second lot of duty, and whether the arrangement holds together are matters a settlement agent or licensed conveyancer is not permitted to advise you on. We act as your solicitor and handle the settlement itself, so you are not managing 2 providers.

What we check that a standard settlement would not

Purchaser wording

That the custodian is described correctly, in the right capacity, and consistently across every document.

Execution dates

That the deed predates exchange, and that nothing is dated in a way that creates a duty problem.

Asset identification

That the deed identifies the same single asset the contract does, in terms that will still work years later.

Lender alignment

That the loan documents, the security and the deed describe one consistent arrangement.

Who may occupy

Whether anyone connected to the fund is intended to use the property, and whether that is permitted.

The exit

That the documents will support a nominal duty transfer to the fund when the loan is eventually repaid.

Explore:

The rest of the SMSF work sits across these pages.

SMSF property law services SMSF property purchase Bare trust and custodian setup SMSF conveyancing Bare trust to SMSF transfer Fixed fees

Questions we get asked

Who actually owns the property during the loan?
The custodian holds legal title and the fund holds the beneficial interest. In practical terms the property belongs to the fund, and the fund receives the rent and bears the outgoings, but the name on title is the custodian's until the borrowing is repaid and the property is transferred across.
Can I use my ordinary conveyancer for this?
They can usually handle the mechanics of the transfer. The difficulty is that the questions which arise on these files are legal ones, and a licensed conveyancer or settlement agent is not permitted to advise on whether the structure works. Most of the problems we are asked to fix were not transfer errors, they were structural ones nobody was in a position to raise.
What if the contract has already been signed in the wrong name?
Tell us as soon as possible. Depending on the state, how far the matter has progressed and what the contract says, there may be a way to deal with it. What is not advisable is proceeding to settlement and hoping it is sorted out later, because by then the duty position is usually fixed.
Do you handle Western Australian settlements?
Yes. WA settlements are ordinarily conducted by a licensed settlement agent, and the sequencing and stamping requirements there differ from the eastern states. We act on WA SMSF purchases and handle the settlement as part of the file.
How long does an SMSF settlement take?
The conveyancing timetable is set by the contract, as on any purchase. What tends to add time is the structure: the custodian company, the deed and the lender's own requirements all have to be in place before exchange. If those are started early the settlement itself is not usually slower than an ordinary one.
What does it cost?
Fees are fixed and quoted before we start. The bare trust and custodian setup is priced separately from the conveyancing and settlement work, so you can see what each part costs. Our fee schedule is on the pricing page.

Send us the contract

Tell us how the fund is set up, who the lender is, and where the property is. We will tell you what has to happen and what it will cost.

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