What documents are included in the Cleardocs limited recourse borrowing arrangement (bank) package?
The Cleardocs limited recourse borrowing document package for SMSF borrowing when the lender is a bank includes:
What information do you need to order a SMSF borrowing (bank) or LRBA document package through Cleardocs?
Download our checklist of information required to order a Cleardocs limited
recourse borrowing document package for when the lender is a bank.
The fund does not require an underlying Cleardocs deed
To use a Cleardocs limited recourse borrowing document package, the SMSF does not require a Cleardocs deed. We strongly recommend that you
update to the latest version of the Cleardocs deed — this is to make sure that the borrowing documents "match" the fund's deed.
You can update the SMSF's deed to a Cleardocs deed — or to the latest version of the
If you do not want to update to the latest Cleardocs deed, you must seek legal advice about the suitability of the limited recourse
borrowing arrangement for your circumstances to ensure that:
- your SMSF deed permits the trustee to:
- borrow money for the purpose of entering into a limited recourse borrowing arrangement;
- charge (that is, grant security over) the assets of the SMSF; and
- appoint a custodian to hold the acquirable asset; and
- the lender has reviewed and is happy with the borrowing provisions in your SMSF deed.
What the SMSF borrowing package does not include
The limited recourse borrowing document package for SMSF borrowing when the lender is a bank does not include:
- the loan documents that the bank will provide (that is, the loan agreement or the mortgage or charge); and
- the transaction documents (for example, a transfer of land form or the relevant contract) for transferring the
asset that the SMSF trustee(s) are using the loan money to buy.
Overview of limited recourse borrowing arrangements
The interactive graphic overview tells the story visually. It includes a
diagram of how limited recourse borrowing arrangements work for SMSF borrowing including:
- the parties involved;
- the documents involved;
- the asset's journey to the SMSF Trustee(s); and
- each document's role.
This article analyses limited recourse
borrowing arrangements for SMSF borrowing.
TheCleardocs information sheet provides a step-by-step guide to
arranging your SMSF borrowing documents through Cleardocs.
The Banks' requirements
We tailor our SMSF borrowing documents after feedback and discussion with the banks. As far as we know, our standard documents meet the
requirements of all major lenders. On our interface, we ask you which bank is the lender so we can tailor the documents accordingly.
- to be aware that from time-to-time the banks change their requirements for the documents for SMSF borrowing; and
- to remember that when the bank reviews the documents, it is doing so to protect its own interests — so some
of the bank's requests may not be in the interests of the SMSF, or its trustee(s), or member(s), etc. Indeed, our
lawyers at Maddocks have seen some requests by banks that, if implemented, may cause the relevant SMSF to be in breach
of superannuation law.
Maddocks makes sure that the master documents we use to provide documents to you comply with superannuation law.
You need to arrange your own legal advice about your bank's requirements — whether those requirements:
- are changes to the documents we provide; or
- are contained in documents the bank provides.
You are welcome to use our lawyers at Maddocks to review a bank's requirements. But the firm will charge for its time
as this sort of work is not part of the free legal helpline we arrange through Maddocks.
Can I make changes to a signed Cleardocs custody Trust deed?
Each lender has their own requirements for custody trust deeds, and preferred process for addressing any issues.
The lender will likely require you to obtain a Deed of Variation to vary your existing Cleardocs Declaration of Custody Trust (Custody Trust Deed) to conform with their requirements.
The Cleardocs Amendment to SMSF borrowing product includes a deed of variation to vary your existing Cleardocs Custody Trust Deed to:
- fix or update any errors in the schedule of your Cleardocs Custody Trust Deed, including the asset details, loan details and/or settlement date;
- change the lender, if required; and
- bring it in to line with the requirements of certain major lenders.
Auto-populate answers using your existing BGL account
Integration with BGL Simple Fund 360 allows you to pre-populate your Cleardocs orders with existing BGL fund information. In order to
pre-populate your answers, start a new order on the Cleardocs website and then click on "Use details from BGL Simple Fund 360" when the
question interface gives you the option to auto-populate your answers.
The Cleardocs system then:
- directs you to the BGL website to log in with your credentials and authorise Cleardocs to access your fund information;
- returns you to the Cleardocs interface and prompts you to choose your preferred BGL document fund from a drop down box; and
- pre-populated the interface with your BGL fund information.
For privacy reasons, Cleardocs does not have access to any of your BGL login details. BGL only provides Cleardocs with certain contact information.
You will need legal advice
To use either document package, the fund must obtain legal advice. Legal advice is required for two primary reasons:
The Limitations of this Pack As this Pack does not include the transaction documents described, you need
legal advice to arrange those documents.
SMSF Compliance with Superannuation Law Although this Pack provides documents which will satisfy the
requirements of Section 67A of the Superannuation Industry (Supervision) Act 1993 (Cth), the 'limited recourse
borrowing arrangement' must otherwise be in compliance with all the requirements of superannuation law. A lawyer can advise on these matters.
If you do not have a lawyer then you are welcome to call the lawyers at Maddocks, who:
- if you are in Victoria, New South Wales or ACT, will give you a quote for the work; or
- if you are in another state or territory, will refer you to its affiliated firms.
More information about SMSF limited recourse borrowing arrangements
Cleardocs has an extensive library of information on SMSF limited recourse borrowing arrangements - please search our ClearLaw and blog library.