Real Estate Investment Alert No. 5 – The Secret to a Successful Deal!

Real Estate Investment Alert No. 5 – The Secret to a Successful Deal!

The Secret to a Successful Deal!

In this Alert we consider:
  • A key factor to achieve a successful investment outcome; and
  • Co-ownership arrangements and how they can work against you.

The Problem

Have you or any of your clients signed the initial documents in respect of a transaction where, as you get more involved in the documents, you realise that if you had your time over you would have approached the documents differently or adopted a different approach to the transaction?

The above realisation may lead to a number of different outcomes, including:

  • The need to try to renegotiate the documents;
  • Leaving everything as is, thereby compromising your position or that of your clients; or
  • The matter falling over due to the inability to make changes.

The ever-changing nature of regulations and market practices in the finance and property investment sectors makes it difficult for property investors and their advisers to be across all the matters they need to be aware of when embarking on transactions with which they are unfamiliar.

This is particularly the case for foreign investors making their first property investment in Australia or local investors getting involved with more complex transactions than those which they are used to.

We understand that often investors do not wish to involve lawyers until the commercial terms of the proposed transaction have been agreed. Notwithstanding this, the above problems should be addressed prior to any documents being signed which commit the investor to a particular path.

The Solution

We are able to assist in this regard by providing flexible, cost effective access to senior legal counsel, with over 30 years’ experience in these areas. By guiding such investors through the main issues they need to be aware of in respect of the transactions documentation, investors will be better placed to:

  • protect their interests when signing the initial documents;
  • save legal costs in the implementation of the transaction;
  • facilitate implementation of the transaction thereby saving time;
  • be seen by the other parties to the transaction as being knowledgeable and savvy investors.

Once the initial documents are then executed, the lawyers engaged in the transaction will be able to implement it in a more time and cost-effective manner.

We regularly highlight issues which investors may not be familiar with and tips for how to avoid the relevant pitfall. Please feel free to contact us for any back issues of our Alert which you may not have received.


It is becoming increasingly common in Australia for investments in non-residential real estate to be undertaken by a group of investors rather than one investor.

This can be due to such matters as the amount required to make the investment is too high for one investor to commit to or because the vendor is only willing to sell down part of its interest in a project.

These co-ownership arrangements can take various forms, with the most common being the use of a unit trust or company, the investors in which are all of the parties which hold or wish to acquire the interest in the property. Other forms include the use of co-ownership and joint venture arrangements. In each case appropriate documentation needs to be put in place to adequately protect all parties’ interests.

Matters to be considered when negotiating such documents include:

  • Funding
  • Decision making
  • Dispute resolution
  • Buy-out rights
  • Allocation of roles and responsibilities

The form of co-ownership arrangement used will depend on such factors as the nature of the investors involved, the current ownership arrangements in place in respect of the property, tax consequences or requirements, the nature of the project and the financing arrangements to be put in place the fund the project.

Each of the above factors will need to be considered before determining the most appropriate form of co-ownership arrangement to be used in a particular transaction. Failure to consider such matters could adversely affect:

  • The tax consequences to one or more of the parties to the transaction;
  • The ability to raise finance for the project;
  • The ability to make decisions in respect of the project;
  • The exit strategy to be adopted in certain circumstances,

all of which may adversely affect the returns made from the project.

TIP: Always seek advice as early as possible as to the most appropriate co-ownership arrangement to be entered into in respect of a project and make sure that all relevant headline issues are properly dealt with in the co-ownership documentation.

In keeping with our aim to assist investors minimise the stress involved in Australian property transactions, we trust you have found the above information useful. Please feel free to share this email with your business network and to contact us to discuss how we can work with you to improve your investment outcomes.

We trust you have found the above information useful and hope it will assist you in current and future transactions. If that is the case, please feel free to share this email with your business network. I welcome your feedback at


The comments made in this Alert do not constitute the provision of any legal, tax or accounting advice by Peter Faludi Consulting or any Director or employee thereof and therefore you should not rely on this Alert in making any decisions relating to present or future transactions in which you are involved. We strongly recommend that you seek legal, tax and/or accounting advice (as relevant) in relation to the same.

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