Building on land we don't technically own...

gus · Oct 11, 2007 3:36 pm

Hi there we are new to this and in the very early stages of considering building our first home. We have been offered a 'gift' of land to build on from my parents, the arrangement being it is ours and we repay money to them for the land when we decide to sell. Are we able to build on land that is still legally in my parents name? Also, will a bank finance this and will it affect our first home buyers grant? We live in Adelaide. Are there any ways around this, we can't afford to 'buy' the land and build a house, but we can easily afford to build a nice house on this land. It is part of my parent's property but is on a second title already. Can't find info anywhere on the net and not sure who to call for information, any ideas or suggestions greatly appreciated!!

devank · Oct 11, 2007 5:04 pm

You can be the guarantor so that your parents can get a loan for themselves. Legally everything would be theirs but you’ll be paying the loan interests.

- devank

arkraider · Oct 11, 2007 5:32 pm

If either you or your wife have never owned a home before and some one that has, is guarantor for your loan you are not eligible for the 1st Home Owners grant. Same deal is if you are the guarantor for some one that has, it is automatically assumed that it is your 1st home also.
Not sure how someone else owning the land will affect it though, as it is technically your 1st home, just the land is not yours....

arkraider · Oct 11, 2007 5:34 pm

Her you go Gus, hope these help......

http://www.revenuesa.sa.gov.au/circulars/c219.html

http://www.revenuesa.sa.gov.au/circulars/c250.html

_Al_ · Oct 12, 2007 12:11 pm

Just hope you never have a falling out with your parents, or they will own whatever is on their land and you'll be screwed. And you'll have them as neighbours. Could be a good thing (built in babysitter) but could be bad (mother/in law constantly annoying you or your SO)

If you do it, do it in writing to cover your butt.

Yak_Chat · Oct 12, 2007 6:57 pm

Gus sounds like your parents are in a position to assist yo move into a next stage of life.

So put it all down on paper and if you feel the need - do the legal bits to ensure you all know where you are at.

It is a risk - as title of the land is the only real proof of ownership.

I know of a couple who were given free rent and use of many acres of land for over 10 years and when the times got tough they were asked to pay rent.

They thought that was unfair so they cut down the steel shed they had built there and walked out with a shed only.

(I do not know the full story from either side)

So make sure it is in writing and on a legal basis - and not a - ohh yeah she'll be right basis.

Re the FHG - See someone with all the right skills on this to ensure you do not compromise this gift from the govt - it will only be around while the conditions are right.
Steve

northlakes · Oct 12, 2007 9:36 pm

Hi Gus,

I doubt very much that any institute will provide you with a home mortgage, if you do not own the land. Think about it…if you default on the loan, how can they recover the debt? They can’t exactly pick up the house and sell it to someone else.

You may find a way around it if your parents went guarantor on the mortgage…..but still doubtful.

A suggestion might be that you parents sell you the land for a nominal fee of $1…you will still need to pay title transfer fees …etc. Your parents then either trust you to pay them when you sell, or you enter into a legally binding personal contract with them that states what will be paid & when.

Cheers,
Mark