LINK Commercial Mortgages (“LINK”) was established in 1999 to serve and cater to the
requirements of commercial and industrial property investors who were seeking viable alternatives
to oppressive bank lending practices at that time.

Over the past almost three decades, LINK has earned its reputation in the Australian credit sector
for professionalism and integrity and as provider of commercial investment funding sourced from
a selected number of Tier-1 Non Bank Financial Institution (NBFI) investor clients.

LINK’s borrower clients range in nature from individuals, partnerships, companies, a variety of
trust structures and special purpose investment vehicles.

If you intend to borrow and conduct a property transaction via a trust structure it will pay to have
your trust deed reviewed by us in the first instance; should there be any issues revealed or any
uncertainty, we will arrange for the trust deed to be vetted by one of LINK’s 3rd party legal
professionals to ensure that the trust is allowed to borrow and undertake the specified purpose.

The proposed purpose may be to acquire and hold for an investment commercial or industrial
property, or, for project specific purposes such as developing an apartment building for on-sale.

It does happen… that once financing is approved and is being documented for settlement, that it
is at that stage discovered by the incoming mortgagee’s lawyers that there are deficiencies in the
trust deed that require a variation or amendment to the trust deed (by annexing a deed of
variation) in order that the financing may settle in accordance with the capabilities of the trust.

If a trust deed, and the accompanying Minutes of the corporate trustee, are not reviewed and
any issues addressed early, this may result in delays and costs and even recission of contracts and
loss of deposit in the case of a time-of-the-essence contracted purchase.

While it is not unusual for a family trust, typically a discretionary trust, to undertake property
investments and borrow for that purpose, the majority of trusts that we see are unit trust
structures.

As part of our due diligence and the process of writing the credit memorandum, LINK reviews and
certifies copies of original trust deeds including the Schedule in the case of discretionary trusts
and the Unit Register and issued Unit Certificates in the case of a unit trust.

Why are Schedules and Unit Registers important? These provide the identities of investors and
potential avenues for the leakage of capital from the borrower structure – lending institutions are
particular in understanding these.

The credit review process in some rare cases will require beneficiaries and unit holders to provide
guarantees; however, in the greater majority of times guarantees are limited to the director(s) of
the corporate trustee and any significant shareholder(s).

Disclaimer

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or  entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is  accurate at the date it is received or that it will continue to be accurate in the future.