Bidding at Auction
When property is being purchased by a Self-Managed Super Fund or a Trustee company, as these are not legal entities, contracts must be signed by an individual as trustee, or the director of a corporate trustee, in their capacity as such, on the trust’s behalf.
It is necessary then to have documentation authorising the trustee, or director on behalf of the corporate trustee, to bid at auction.
Legal advice should be sought in the drafting of this document and would expectably be set out on letterhead or otherwise in writing, and include:
- The name of the individual,
- The company for and on behalf of which they are bidding, and
- That it is in their capacity as a trustee for their trust.
In fact, rather than a trustee, a ‘bare trustee’ should be the signatory to a contract for and on behalf of the super fund whilst-ever there are any loans outstanding.
Again, it’s essential that legal advice is sought in relation to investments of SMSFs as there are potential stamp duty implications when the contract is entered into with incorrect terms and or parties.
Please watch our short video below to find out more about the legal requirements in bidding and signing of contracts at auctions.