Interdependant Contracts

[mcronin]

Hi,

I am acting for a Vendor who is selling a rural property via 2 Contracts, each Contract has a separate title however there are 2 different Purchasers.

Contract 1 is to Mr & Mrs X

Contract 2 is to Mr & Mrs X as Trustee for their super fund

There is one Mortgage over both titles.

The Contracts are interdependent on each other (i.e. settlement is to occur simultaneously).

Can I link the Workspaces?

Monica

[GeorgePolus · Accepted solution]

Hi Monica

You most certainly will be able to complete this transaction in PEXA.

Please note.  In NSW the legal entities (being the trustees of the trust) may only be entered as transferee.   The fact they are trustees of a trust is not relevant to NSW LRS. 

You may do so in one of two ways, depending upon how the sale contracts are set up.

Because one Mortgage must be over both titles, you will need to complete the transaction in a single lodgment case.

OPTION 1

Create a single transfer of land which references both titles. 

Only a single stamp duty reference will be required, but will be required to reference each title. 

OPTION 2

Create two separate transfer documents in a single lodgement case.

Two separate stamp duty reference numbers will be required.

Please let me @GeorgePolus know how you go.   Please come back to me if you have more questions.

Regards

George 

[Lizziecbp]

Hi,

My understanding was that PEXA cannot do simultaneous settlements? I understand that Linked financial settlements are different in that if it is a chain of Purchaser A buys from Vendor B (first transaction)

Vendor B buys from Vendor C (second transaction)

then the first transaction will settle first and the second one will proceed to settlement, if it does not settle then the money is held in a holding account until it does. BUT that does not make it simultaneous.

[GeorgePolus]

Hi Hsing,

PEXA most certainly supports Simultaneous Settlements.   

The capability supports up to 10 work spaces in a single chain.

The criteria required for two work spaces to be linked in a chain is that Vendor Surplus from the preceding work space are used as purchaser equity in the trailing work space. 

You will find instructions for handling of simultaneous settlements here.

If you have more questions, or would like one of our PEXA Direct Specialists to assist you please let me @GeorgePolus know. 

Regards

George

[Lizziecbp]

Hi team,

I think the original enquiry was whether you can facilitate interdependent contracts which are to settle simultaneously. The difference is, if the second transaction falls over then the first must fall over as well. They both have to settle together or not at all.

---

@GeorgePolus wrote:

Hi Hsing,

PEXA most certainly supports Simultaneous Settlements.   

The capability supports up to 10 work spaces in a single chain.

The criteria required for two work spaces to be linked in a chain is that Vendor Surplus from the preceding work space are used as purchaser equity in the trailing work space. 

You will find instructions for handling of simultaneous settlements here.

If you have more questions, or would like one of our PEXA Direct Specialists to assist you please let me @GeorgePolus know. 

Regards

George

---

[GeorgePolus]

Hi Hsing, 

The Simultaneous Settlement model is - one fail all fail.  

In this model PEXA will aggregate funds from all workspaces in the chain (up to 10 ) and settle all funds in a single settlement transaction.

If settlement is unable to proceed (for example insufficient funds in the  Trust Account of one of the source accounts) then none of the workspaces in the chain will settle.   (Naturally, alterts are issued to all impacted parties and PEXA will re-try at 30 min intervals throughout the day).

Only following financial settlement of all funds will PEXA the lodge dealings with the respective LR's (which may be across multiple different jurisdictions).

Please let me know if you have more questions. 

Regards

George 

[mcronin]

Hi George,

Thank you for your assistance.  The transaction was completed in the one Workspace with two Transfers.

Regards,

Monica

[Lizziecbp]

Hi George, 

Thank you for  your reply. I wanted to clarify interdependent contracts where the funds are not in a chain. 

For instance, a purchaser is purchasing two properties with two different vendors. They must both settle at the same time and if one should fail then the other will fail as well i.e. there is no trail or chain as to funds. This is what we mean by interdependent. 

[GeorgePolus]

Hi Hsing

That is great news- 

Apologies I did not realise that the scenario was really two transfers in a single workspace. 

Glad to hear all went well. 

Regards

George

[Lizziecbp]

Hi George, 

Monica glad to hear it went well. 

George can you please confirm that you cannot do interdependent settlements? If Monica's second transaction had fallen over then the first would have still settled?