03/06/2019

There’s a number of things to consider when getting out of a CBA SuperGear arrangement.

John and Mary acquired a residential property in NSW using their SMSF under a limited recourse borrowing arrangement. The finance was provided by one of the big four banks, Commonwealth Bank of Australia (‘CBA’) and a CBA SuperGear lending product was entered into.

With the recent changes in the SMSF lending landscape – most noticeably the big four banks choosing to exit and discontinue their SMSF lending products – John and Mary have decided that they wish to remove and replace the current custodian of the holding trust with a new corporate custodian.

The first point of reference for John and Mary would be to review the current CBA SuperGear trust deed to determine whether the trust deed permits the resignation of the current custodian and the appointment of a new custodian otherwise the holding trust deed may need to be amended to effect this.

John and Mary also need to work out whether authorisation is required from their lender in order to change the trustee of the holding trust. Holding trust deeds prepared by the banks often limit the custodian company to a company incorporated by the bank.

In John and Mary’s case this means that they may be required to seek confirmation from CBA that it would be prepared to execute any necessary documents to remove the current custodian company and replace it with a new corporate custodian.

Then there is the question as to whether the removal and appointment of the trustee of the holding trust may be considered as a resettlement of trust and also whether the Deed of Removal and Appointment may need to be registered on the local State general register (depending on the State or Territory’s applicable law that applies to the deed).

In Mary and John’s case the law that applies to the deed is the law of NSW and it is likely that CBA will require that the Deed of Removal and Appointment be registered in order to transfer legal title of the property from the current custodian to the new custodian.

John and Mary could consider discharging the current mortgage in order to remove the current custodian as mortgagor and to register a new mortgage with a new custodian as the mortgagor.

At Townsends Business & Corporate Lawyers we can assist with preparing the necessary documents to remove and appoint a new custodian of a holding trust to meet your current requirements.

For further information, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222 or email info@townsendslaw.com.au to see how we can assist.