Vendor Finance Lawyers
Loan and security documents for property sellers who agree to be paid part of the price over time, secured by a mortgage over the property sold.
- Loan agreement and registered mortgage
- Special conditions for the contract of sale
- Guarantees and default terms
Seller Finance
What Vendor Finance Is
In a vendor finance sale, the seller lends part of the purchase price to the buyer. Title passes to the buyer at settlement, and the unpaid balance is secured by a mortgage back to the seller.
It allows a sale to proceed where the buyer cannot borrow the full amount from a bank, and it gives the seller interest on the balance. The risk sits with the seller, so the documents do the work a bank's credit team would normally do.
We prepare the vendor finance documents. The sale conveyancing itself is a separate matter and a separate fee.
The Document Set
What We Prepare
Each document is drafted for the specific deal, not a generic template.
Loan Agreement
Amount, interest rate, repayment schedule, any balloon payment, prepayment and the events that make the balance fall due.
Registered Mortgage
Security over the property sold, lodged for registration at settlement. Where the buyer also has a bank loan, priority between the 2 mortgages is agreed in the documents.
Contract Special Conditions
Conditions in the contract of sale that tie the sale to the finance terms and the settlement mechanics.
Guarantees
Personal guarantees from the directors where the buyer is a company, so the seller is not relying on the company alone.
Repayment and Due-on-Sale Terms
What happens if the buyer sells, refinances or transfers the property before the balance is repaid.
Default and Enforcement
Notice periods, default interest and the steps the seller can take if payments stop.
Step by Step
How a Vendor Finance Sale Runs
From agreed terms to a discharged mortgage.
Terms Agreed
Price, deposit, amount financed, interest rate, term and repayments are settled between the parties.
Credit Law Check
We confirm whether the credit laws apply to this buyer and this property.
Contract Conditions
Special conditions are added to the contract of sale before exchange.
Loan and Security Documents
The loan agreement, mortgage and any guarantees are drafted and signed before settlement.
Settlement
The mortgage is lodged with the transfer, so it registers at the same time as the buyer takes title.
Repayment and Discharge
Once the balance is repaid, the mortgage is discharged and removed from the title.
Our fixed fee for the vendor finance documents is set out on our pricing page. The sale conveyancing is charged separately.
View Our Fixed FeesBefore you start
What to Settle Before the Contract
Vendor finance turns the seller into a lender. The terms of that loan need to be agreed as carefully as the price.
The structure: Whether the buyer takes title at settlement and gives the seller a mortgage back, or the sale proceeds on a terms or instalment contract with title passing later. Each carries different risks for both sides.
The loan terms: The amount financed, the interest rate, the repayment schedule and term, any balloon payment, and whether early repayment is allowed.
Security and ranking: Whether the seller’s mortgage ranks first or behind a bank’s mortgage, and whether personal guarantees or other security are required.
The buyer and the property: Whether the buyer is an individual or a company, and whether the property is residential or commercial, as this decides which credit laws may apply.
Common Mistakes
Treating it as an informal arrangement: Vendor finance agreed on a handshake can leave the seller without enforceable security if the buyer stops paying.
Ranking behind a bank without a priority agreement: Where a bank also lends to the buyer, the seller’s position depends on the order of registration or a deed of priority.
Overlooking duty and tax: Transfer duty is generally assessed on the full price at settlement, and interest received by the seller is usually taxable. Your accountant should advise on both.
No clear default process: The loan documents should set out what counts as default, the notice to be given and the steps the seller may take to recover the debt.
Residential Buyers and the Credit Laws
Where the buyer is an individual buying residential property, whether to live in or as an investment, lending to them can be regulated under the national consumer credit laws. A seller who provides regulated credit without a licence or exemption faces significant penalties.
Vendor finance is most often used with company buyers and with commercial, industrial and development property for this reason. We confirm how the credit laws apply before any document is drafted.
Services that often go with a vendor finance sale.
Frequently Asked Questions
What is vendor finance?
Is vendor finance legal in NSW?
What if the buyer stops paying?
Is vendor finance the same as rent to own?
Can the buyer sell before the loan is repaid?
Do you act for buyers as well?
Can the seller keep title until the buyer has paid in full?
Is vendor finance only used for property sales?
Selling With Finance Terms?
Send us the proposed terms and we will confirm how the credit laws apply and what the document set will look like.
Book a Free Consultation