Caveat loans on property owned by a trust or company

Plenty of business property isn’t owned by a person at all. Commercial premises sit in a family trust; an investment unit is owned by a company; the family home is held by a trustee for asset-protection reasons. None of that rules out a caveat loan. It just adds a layer of checking, and the speed of that checking depends almost entirely on how organised the paperwork is.

Who gives the security when a trust owns the property?

A trust isn’t a legal person. The property is registered in the name of the trustee — an individual or, more often, a company — which holds it for the beneficiaries. So the trustee is the party that:

• borrows, or guarantees another party’s borrowing;
• signs the loan agreement charging the property; and
• consents to the caveat.

If the trustee is a company, its directors sign on its behalf. Landgate’s caveat guide, for example, lists a company officer among the people who may sign a caveat for a corporate party.

What does the lender check?

Check	Why	What you provide
The trust deed and all variations	Confirms the trustee can borrow, guarantee and give security	A complete, signed copy
Who the current trustee is	The name on title must match the current trustee	Deed of appointment or change of trustee, if any
Company details for a corporate trustee or owner	Confirms directors and that the company is registered	ASIC company extract
Benefit to the trust	A guarantee by the trust for another entity should make sense for the trust	A short explanation of the relationship
Personal guarantees	Adds support from the people behind the structure	ID for each guarantor

ASIC’s registers can be searched by company name or ACN, which is the quickest way to confirm the company on title is the one you think it is.

What slows these deals down?

1. A missing deed. The single biggest cause of delay. Find it — and every variation — before you enquire.
2. A trustee change that never reached the title. If the trustee changed but the title still shows the old one, the registry records need fixing.
3. Directors who’ve left or can’t be contacted. Every current director usually signs.
4. Unusual deed clauses. Some deeds restrict borrowing or require consents from an appointor or beneficiaries.
5. Several unit holders. In a unit trust, the lender may want evidence that holders support the loan.

These are also covered in our wider list of what slows a caveat loan.

Want to test a trust-owned property before you dig out the deed? Use the Feasibility Checker for the numbers, then tell us about the structure.

Can a company’s property secure a loan to a different business?

Yes, through a guarantee. For example, a property-holding company owned by the same family can guarantee a trading company’s loan and support it with a caveat over its property. The lender will ask why the arrangement benefits the property company, and the directors of both usually sign.

What about property in a self-managed super fund?

Super is a different world with its own strict rules. If the property you’re thinking of sits in an SMSF, speak to your SMSF adviser before assuming it can be offered — and expect us to look for other security first.

An illustrative example

Illustrative only.

A Darwin marine services company needs $260,000 to cover a gap before a government contract payment. The directors’ family trust owns a commercial shed worth about $800,000, with no mortgage. The corporate trustee guarantees the company’s loan and gives a caveat over the shed; the directors also guarantee personally. The accountant supplies the deed and two variations on the day, and the lender’s lawyers confirm the trustee’s powers the same afternoon. Without the variations, the file would have stalled.

A checklist for trust and company borrowers

• Complete trust deed, signed, with every variation
• Evidence of any change of trustee, and confirmation the title shows the current trustee
• ASIC details for the corporate trustee or owning company, with current directors
• ID for every director and every individual guarantor
• A short note on how the entities relate and why the loan benefits each
• Contact details for your accountant, who often holds the deed
• Payout figures for any loan secured on the property

Tick these off before you enquire and a trust-owned property can move almost as fast as one held in your own name.

Have property in a trust or company? Let’s check it

Structures like these are routine for us. What makes them fast is having the documents ready.

Enquiring takes about 60 seconds with no credit check. We keep your enquiry to ourselves — no mass distribution to lenders — and a specialist calls you to go through the structure. Tell us exactly who is on title and who the directors are; accurate details save a lot of back-and-forth.

Talk through your structure →