Amendment to SMSF borrowing

The lender has not approved, and requested changes to, a signed Cleardocs Custody Trust Deed — what should I do?

If a lender has requested changes to a signed Cleardocs Custody Trust Deed, you should check the requirements with your lender. Each lender has their own requirements for custody trust deeds, and preferred process for addressing any issues.

Your 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.

These requirements may relate to:

  • the terms of the Custody Trust Deed (for example, the drafting of particular clauses); or
  • the details of the asset the SMSF trustee is acquiring through the limited recourse borrowing arrangement listed in the Custody Trust Deed (for example, incorrect title details being listed for a property).

The Cleardocs Amendment to SMSF borrowing product includes a deed of variation to vary your existing Cleardocs Custody Trust Deed to:

  • bring it in to line with the requirements of certain major lenders — as known to our lawyers, Maddocks (on the interface, we ask you which bank is the lender); and
  • fix or update any errors in the schedule of your Cleardocs Custody Trust Deed, including the asset details, loan details and/or settlement date.

You should check with your lender first to make sure this is what they require. From time to time, banks change their requirements for SMSF borrowing — and your lender's requirements will not necessarily be satisfied by the Cleardocs Amendment to SMSF borrowing product.

There may be other issues with your Cleardocs Custody Trust Deed that the Cleardocs Amendment to SMSF borrowing product cannot address — for example, your existing Cleardocs Custody Trust Deed being incorrectly executed or dated.

You must seek your own legal advice about your lender's requirements. You are welcome to use our lawyers at Maddocks to review a lender's requirements — they will charge for their time as this is not part of the free legal helpline we arrange through Maddocks.

What happens if any of the authorised investment details in the schedule to the Cleardocs Declaration of Custody Trust (custody trust deed) are incorrect?

When you purchased your Cleardocs Declaration of Custody Trust (Custody Trust Deed) as part of the SMSF borrowing (bank) document package, you provided the details of the asset the SMSF trustee is acquiring for the fund through the limited recourse borrowing arrangement — including the loan term and settlement date. You also nominated which bank is your lender.

Under the Cleardocs Custody Trust Deed, the SMSF trustee and the custodian agree that the details in the schedule are the details of the asset the SMSF trustee is acquiring for the fund through the limited recourse borrowing arrangement.

If these details are incorrect (for example, title details are wrong), or have changed since you purchased the Cleardocs SMSF borrowing (bank) document package (for example, settlement was delayed and the settlement date you nominated is no longer current), your lender may require you to vary your Cleardocs Custody Trust Deed to fix or update the schedule and ensure that it accurately states the details of the asset.

The Cleardocs Amendment to SMSF borrowing product includes a deed of variation to do this — and will replace the schedule in your existing Cleardocs Custody Trust Deed with an up-to-date schedule listing all of the details of the authorised investment.

Can I use the Cleardocs Amendment to SMSF borrowing package to change the authorised investment altogether?

No, this document is not suitable if you are wishing to change the authorised investment.

The purpose of this product is to enable you to update details or correct details of the asset the SMSF trustee is acquiring — but not to change the authorised investment.

The fund will need a new custody trust deed if it is purchasing a different asset altogether.