Simultaneous settlements - one source fund

[NicoleAghabi]

I have two purchases with one combined loan. Incoming mortgagee requires simultaneous settlement and won’t split the source funds into the two workspaces.

they are asking me which workspace to place the funds into.

how would this even work?

how do we place source funds for two properties into one workspace, and be able to have excess funds filter through to the linked settlement?

[NicoleAghabi]

My two matters have now settled.

the bank refused to split the loan and required the two workspaces settle simultaneously.

after speaking with PEXA, they said a simultaneous settlement can only flow from a sale to a purchase.

we finally figured it out.

i had to provide the amount of funds required for one workspace and that would be the second flow on workspace.

the bank did a “financial link” and entered the whole loan amount (ie did not split the loan) in the first workspace.

the financial amount to like is the required amount for the second workspace.

[Kenf]

Dear Nicole,

Good morning and thank you for sharing your experience. I have a similar situation now. In my case, my client is purchasing three adjacent properties with one loan, and he is contributing the shortfall himself. When you said, "I had to provide the amount of funds required for one workspace and that would be the second flow on workspace" and "the bank did a “financial link” and entered the whole loan amount (ie did not split the loan) in the first workspace", did you mean that the bank linked the two financial settlements together, so that it put the entire loan funds into one workspace (and you put your client's shortfall in that workspace, too) and then in one of the destination line items you put the funds required to settle the linked purchase so that the amount is populated to the second workspace?

Thank you again.

Regards,

Ken Fung

[NicoleAghabi]

Yes. That’s that’s what happened.

So it sounds like in your case having 3 properties, working backwards:

let property C = $Z

let property B =  $Y + $Z and

let property A = $X + $Y + $Z

and financial lines included:

property A = $Y + $Z linked to B and

property B = $Z linked to C

NB the entire loan amount plus shortfall goes into property A.

That’s if C follows B which follows A.

But, I don’t know if it has to go that way. You may be able to have property B & C flow directly from A

ie let property C = $Z

let property B =  $Y and

let property A = $X + $Y + $Z

and financial lines included:

property A = $Y linked to B and

property A = $Z linked to C

NB the entire loan amount plus shortfall still goes into property A.

Where B and C both follow A.

[Kenf]

Dear Nicole,

Thank you again. That really helps.

Regards,

Ken Fung

[NicoleAghabi]

Ken can you please let me know how you go and what you did in the end. I'm curious which of the two I've described your bank decides to go with (or if they have another solution). I'm in the same situation as you and would like to know for future reference (ie which method).

[Kenf]

Dear Nicole,

Settlement has been completed. However, instead of linking the three separate workspaces together and settling them simultaneously, My client's bank required the three workspaces to be combined into one. The following link explains how to do that:

https://community.pexa.com.au/t5/Help-Centre/What-is-a-related-dealing-in-PEXA/ba-p/64

It is called "Related Dealings" and it works like an "on-sale" or "direction transfer" transaction.

Thank you again for your help.

Regards,

Ken

[NicoleAghabi]

Oh that's good!

I wonder why PEXA told me I couldn't do it. That looks like a much better option.

Thanks for letting me know!