What are the implications, legalities of...

[sleazius]

Dylan - I'm going cut to the chase, and I should have said this before.

Don't do this. There are a million things that can go wrong, and only 1 way that it can be made right. The odds are stacked against you getting the money back, regardless of who it is (including family... in fact family are usually the worst).

If you do decide to push on be prepared for the following:

1. A chance of never seeing your money again.

2. A chance of having no relationship with this person ever again.

3. A chance of it taking years to get your money back.

4. Property prices are falling rapidly. If this is anything to do with property run away right now.

Finally...

5. This person can't get bridging finance because they're too risky for a professional to lend to.

If I walked into a room with a bunch of investors and said "I've got this amazing investment opportunity but these are your risks by investing with me",  how many do you think would say "no problems mate, take my money"?

 

[StevepGT3]

28 minutes ago, sleazius said:

Dylan - I'm going cut to the chase, and I should have said this before.

Don't do this. There are a million things that can go wrong, and only 1 way that it can be made right. The odds are stacked against you getting the money back, regardless of who it is (including family... in fact family are usually the worst).

If you do decide to push on be prepared for the following:

1. A chance of never seeing your money again.

2. A chance of having no relationship with this person ever again.

3. A chance of it taking years to get your money back.

4. Property prices are falling rapidly. If this is anything to do with property run away right now.

Finally...

5. This person can't get bridging finance because they're too risky for a professional to lend to.

If I walked into a room with a bunch of investors and said "I've got this amazing investment opportunity but these are your risks by investing with me",  how many do you think would say "no problems mate, take my money"?

 

Spot on, and unfortunately YOU the lender, become the arsehole for wanting YOUR money back.

[WOKA]

4 hours ago, Rob said:

WOKA, re the above, wouldn't it be simpler for you to purchase the asset on your friend's behalf on the (documented) understanding that he is able to purchase it from you at the original price paid by you, plus expenses?

Hey Rob..

Its been suggested before, but the stamp duties involved would be considerable.  If there was away to get around the stamp duty aspect, that would be great.  

D.

[StevepGT3]

49 minutes ago, WOKA said:

Hey Rob..

Its been suggested before, but the stamp duties involved would be considerable.  If there was away to get around the stamp duty aspect, that would be great.  

D.

I think you could be added ( and later removed from ) the contract of sale without attracting any stamp duty

[Coastr]

20 hours ago, edgy said:

I don’t know you personally, but based on this, I think we would get along pretty well. 

I’m guessing not a lawyer!

If there is steak and s good red involved, I get along with everyone.

[WOKA]

15 hours ago, StevepGT3 said:

I think you could be added ( and later removed from ) the contract of sale without attracting any stamp duty

Interesting..

[firstone]

I would still want a very clear written agreement of terms on what ifs including people that are a part of the borrowers estate. I'd also take possession until repayment was made. Borrowers need motivation. 😉

I don't see a way that I would be comfortable to do this myself other than to purchase and sell to him.

Clear title and control over your asset. Zero risk if you insure it. Which you would have to do, so that's more cost. What's it really worth to him? 

Then as has been mentioned, if real estate is in the equation I definitely wouldn't do it right now.

Interesting for sure.

 

[StevepGT3]

I was once asked, along with others to temporarily deposit funds into a friends account so that he could show that he had enough funds to obtain Australian residency, the second that the question was asked I knew for certain that the friendship was never going to be the same, no matter the outcome.When I refused, I was accused of not trusting him, to which I replied that, him I trust, but if he gets hit by a bus tomorrow where does that leave me, also if Immigration freezes his accounts,as they can easily see where the funds had come from, where does that leave me.As he didn`t give a shit about those scenarios, I decided to not give a shit about his residency.

[OBRUT]

 

[Troubleshooter]

5 hours ago, StevepGT3 said:

I was once asked, along with others to temporarily deposit funds into a friends account so that he could show that he had enough funds to obtain Australian residency, the second that the question was asked I knew for certain that the friendship was never going to be the same, no matter the outcome.When I refused, I was accused of not trusting him, to which I replied that, him I trust, but if he gets hit by a bus tomorrow where does that leave me, also if Immigration freezes his accounts,as they can easily see where the funds had come from, where does that leave me.As he didn`t give a shit about those scenarios, I decided to not give a shit about his residency.

You left out one main common risk Steve ie what happens if???, as did most others above .... if a woman gets in a man's ear 

[StevepGT3]

1 minute ago, Troubleshooter said:

You left out one main common risk Steve ie what happens if???, as did most others above .... if a woman gets in a man's ear 

There was actually ZERO chance of that in this instance,and being pre Gay marriage , was the reason for the shifty immigration business.

[Troubleshooter]

42 minutes ago, StevepGT3 said:

There was actually ZERO chance of that in this instance,and being pre Gay marriage , was the reason for the shifty immigration business.

It's a messy affair being involved with others issues - I have enough trouble dealing with myself!

[StevepGT3]

1 hour ago, Troubleshooter said:

It's a messy affair being involved with others issues - I have enough trouble dealing with myself!

exaccory

[Coastr]

3 hours ago, Troubleshooter said:

You left out one main common risk Steve ie what happens if???, as did most others above .... if a woman gets in a man's ear 

This guy mans well.

3 hours ago, StevepGT3 said:

There was actually ZERO chance of that in this instance,and being pre Gay marriage , was the reason for the shifty immigration business.

Gender of partner is less important than the fact they can get in the ear and take control.  I also don’t think being married makes much difference having helped two friends get their spouses residency.  That was just stat. decs. in both cases and no cash changing hands.

I wouldn’t mess around with immigration laws.  They are no joke and getting ‘special treatment’ if you want to cross borders is a bad life choice.  If you need cash to immigrate, well, get saving.  You made a wise choice to sidestep that.

Does anyone have a good friend lending cash story?   Seems they are rare compared to the others, or maybe it’s jusy an IMS thing and overblown by the Internet.

[Lucky Phil]

I have avoided commenting on this post as I guess it is up to each individual what they do with their money, but a couple of the posts have prompted me to write a story about my mother.

A number of years ago my mother met a fellow at her work.  He was a fairly nice guy and according to my mum, he was just a friend, but there was more to it than friendship I am sure.  We found out recently that he and mum even travelled overseas on holiday a number of times.  She really did not tell my sister and I much about him or their "friendship/relationship".  Mum and dad had divorced many years earlier.

Anyway we found out after the event that mum lent this guy money to start a business and also helped him with funds to build a house in Queensland.  The amounts were substantial.  Well over $100,000 we believe.  There was no written agreement it seems, just a verbal agreement that the money would be repaid, and a great deal of trust.  So he started his business and built the house and mum was often away in Queensland visiting.

One day mums friend was driving his car from his house in Queensland to the local town, when a young lad, who had taken his dad's car for a joy ride, came around a bend, lost control of the car he had borrowed and ran into mum's my friend's car, killing her friend instantly. 

The long and short of it was that he left no will and as it turns out, unbeknown to my mother, had never divorced his wife.  As a result his ex-wife inherited all of his estate.  Mum engaged a lawyer and managed to halt proceedings but after several thousand dollars spent, she had to decide how much more she was going to throw at the lawyer towards what appeared to be a lost cause.  In the end she just walked away and never saw any of the money again.  

End of story, sad but true. 

 

[jakroo]

I have lent to friends a number of times over the years.  Relatively smallish sums of money (but still in the thousands) and were okay if I lost the money but the risk was still there.

On 2 occasions, I lent money to assist bridging - one was to my very best friend to clear a shortfall on a car lease payout.  3 months term and I knew it could be longer and it was for an amount that would have hurt me and obviously our relationship (we're about to hit 30 years as mates so it ended okay).

The second was more complicated. It was a very collectible vintage watch, which had been given to him by his Dad.  I took physical control of the security, and the written agreement outlined the purpose of the loan (his reasons for needing the funds as well as my interest in helping him but no interest in the project he was getting involved with), the asset used as security, the terms of repayment and what happens after 3 months and 6 months if some or no repayments had been made. In essence, the loan was interest free and it was for less than 50% of the security.  The terms were that between day 1 and 3 months it was to be sold to a well known dealer and the original loan was to be paid to me less any repayments and then any balance to the original owner.   After 3 months it became mine to keep but I had to hold it for a further 3 months just in case he wanted to buy it back with a 10% uplift.  At the end of 6 months it became mine and I could sell it if I wanted to, although I had no intention to as I always wanted him to get it back.  I ended up with for 3 years (and by then it was worth 4 times the loan amount).  I sold it back to his sister for the 10% uplift and it's now been bequeathed to me in his will.

I suspect this one was much easier to do given the underlying asset and the amount involved compared to the OP but the principles are the same..... protection of yourself and your money and the what happens if.....

But having written all of this, I suspect this deal is property and the value will be very considerable.  Don't do it the way you've suggested.

Stamp duty will be considerable but less than what you'll lose if it goes south.  Also you could build this into the agreement where your costs are paid by them... Either at the time or as part of the transfer back to them.

[symsy]

Put a PPSR claim over the new asset , enough to be a fly in the ointment if they are not honourable .  Trust is a great thing , I thrive for it with good mates, just make sure it’s just a you and him situ if u have you have to liquidate to realise your cash back .

very very hard to be the home  wrecker , been there . 

good luck , monies getting out there , opportunities less .. unless fire sales of prestige cars is ur thing !!

[Coastr]

@jakroo you certainly set that up right and then did the right thing by them.  By setting up the expectation up front and the way in which the security would be yours it made things crystal clear yet fair.

And by then not taking the option of getting the money you probably made a friendship better at just the cost of a bit of lost interest income.  It's the right way to do it.

You wonder why banks make you sign so much stuff and then when you start looking into all the scenarios where it can go sideways.....   I remember hearing people saying 'the bank just wants your house' - err, no they don't.  They want you paying the loan for as long as possible at the highest interest rate possible without you ever talking to their legal department.  Same should be for personal lending - cash back as quick as possible under the clearest terms possible without even looking at legal.

[WOKA]

All good, money out, house bought, other property sold and money returned.

Sometimes you have to have a little faith with humanity.

 

 

 

[wilson59]

I helped out a Nigerian Prince once that was ousted by his family ( his dad was a prick ) 

apparently .

I leant him access to all my accounts to deposit money with the promise to keeping all the interest that the millions of dollars would earn .

Really nice bloke 

[LeeM]

2 minutes ago, wilson59 said:

I helped out a Nigerian Prince once that was ousted by his family ( his dad was a prick ) apparently .

 You too? Horrible, horrible family 

[Coastr]

19 hours ago, WOKA said:

All good, money out, house bought, other property sold and money returned.

Sometimes you have to have a little faith with humanity.

 

 

 

Well you are officially ‘Friend of the decade’