Limited Recourse Borrowing Arrangements are a method by which Self Managed Superannuation Funds may borrow to acquire assets, including real property. It is a loan arrangement by which the financier may take a mortgage over the subject property but the mortgagee's rights are subject to recourse only to the subject property and do not extend to other assets of the Self Managed Superannuation Fund, and therefore the lender is unable to seek payment of any deficit from the balance funds of the super fund.
Often lenders will require a higher LVR (loan to value ratio) and in certain cases further security such as personal guarantees from the members but the arrangement does allow the superannuation fund to undertake investments it would not otherwise be able to make, and with the benefit of super funds being taxed at generally lower rates than high earning individuals it can be a very beneficial investment strategy.
Bennett & Philp are industry leaders in advising on and producing documentation for Limited Recourse Borrowing Arrangements by Self Managed Superannuation Funds. We have developed in conjunction with leading Superannuation Counsel an approved suite of documents for both the custodian trust arrangement and loan aspect associated with the transaction.
Our documents have been tried and tested and approved by all major lenders.
With the benefit of a highly experienced property section, we also provide all services ancillary to the Limited Recourse Borrowing Arrangement.
If you would like to make an enquiry regarding limited recourse borrowing arrangements please call our business and commercial law team on +61 7 3001 2999 or enquire on-line.