What is a Bare Trust in SMSF property investing?

A bare trust is a legal structure Australian law requires to hold a property bought through an SMSF. It keeps the asset separate, because SMSF loans have to be 'limited recourse' — meaning the lender can only claim that one property if things go wrong.

Why is 'and/or assignee' dangerous in property contracts?

In many Australian states, changing the buyer name via an assignment clause is treated as a second transaction, triggering duplicate stamp duty charges. Contracts should be signed in the correct entity name from day one.

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Property Strategy & Structure• Jun 10, 2025• 9 min

Double Stamp Duty & SMSF Assignment Clause Traps

Educated By HostVirginia Graham RichesVeteran Mortgage Broker & Former SFE Interest Rate Dealer

Property lawyer Kathleen Chu has spent twenty years watching people sign contracts they didn't fully read. Her message is simple: the contract is where deals are quietly won or lost, and the cheapest insurance in property is doing your homework before you sign — not after.

For a unit, the $250 strata report earns its keep: it shows whether the admin and capital-works funds are healthy, whether there's structural damage or water ingress, and whether the owners are at war. For a house, a building-and-pest report catches the expensive surprises — asbestos, and the big one, an unapproved granny flat that can land on you to demolish or legalise.

Her sharpest warning is about structure: buy in an SMSF and the entity on the contract has to be right before you exchange, or you can trigger a second round of stamp duty. The rule that runs through all of it — ask your questions before you're committed, because afterwards 'I'll just add a granny flat' can quietly become 'I can't.'

Episode Snapshot

At a Glance

This episode features Kathleen Chu (Specialist Property Solicitor) in an honest, plain-English conversation about how property and lending really work in Australia. It's the kind of behind-the-scenes detail that helps you understand your options — and the questions worth asking — before you talk to a bank.

Key Focus Indicators

Guest: Kathleen Chu
Primary Category: Legal & Conveyancing
Duration: 9 min

Listen or Watch the Conversation

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Who This Episode Is For

SMSF trustees planning property purchases

Investors purchasing properties through a Family Trust

Accountants advising complex borrower setups

Featured Expert

Kathleen Chu — Specialist Property Solicitor

Kathleen Chu is the principal solicitor at Ledger Legal, specializing in structuring commercial and residential acquisitions through trusts and SMSF LRBA vehicles.

Gold Nuggets From The Episode

Gold Nugget 1: An unapproved granny flat becomes your problem

What was said:

"If the previous owner built without council approval, the liability transfers to you on settlement."

Why it matters:

You can be forced to demolish it or pay to get retrospective approval — neither is cheap.

What borrowers miss:

A building-and-pest report and a quick council check flag it before you sign; afterwards it's yours.

Next step: Always have the contract, the council records and a building-and-pest report checked before you commit.

Gold Nugget 2: The wrong name on an SMSF contract can mean double stamp duty

What was said:

"The buying entity has to be correct before you exchange contracts."

Why it matters:

The bare trust isn't set up until purchase, so a misstep can mean paying duty twice to fix the title.

What borrowers miss:

Buyers sign in their own name 'to sort out later' and get hit with a second duty bill.

Next step: If an SMSF is involved, get the lawyer in before you sign — not after.

The double stamp-duty trap

Real-World Case Study

An investor signed a $900k Brisbane contract in their own name with 'and/or assignee,' planning to buy through their SMSF.

Standard Major Path

The bank rejected the loan because the contract wasn't in the trust's name — and the state revenue office threatened a second $35k stamp-duty bill to move the title across.

Tailored Structural Path

Ledger Legal stepped in, cancelled the contract cleanly during the due-diligence window, and re-signed it in the correct trust name.

Strategic Outcome

Loan approved under SMSF rules — with no double stamp duty.

Frequently Asked Questions

Integrated Finance Ecosystem

Related Strategy & Lending Pathways

Want to go deeper? Here's where to learn the mechanics, model your own numbers, or talk to a specialist.

Technical explainer

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Read the deep mechanics behind credit parameters, negative gearing offsets, and scaling limits.

Strategy Explainer

Diagnostic bridge

Structur Assessment

Map your own numbers, stress-test capacities against APRA buffers, and identify credit obstacles.

Map Your Situation

Speak with specialist broker

Commercial Finance Australia

Specialist SMSF and commercial property lending execution

Advisory Enquiry

Virginia Graham Riches: Hi, I'm Virginia Graham, mortgage broker and host of the Property and Mortgage Insights podcast. Today we're speaking with Kathleen Chu from Ledger Legal, a trusted legal expert with 20 years' experience who helps clients navigate the property buying process with confidence. If you've ever wondered what you should be thinking about before you sign anything, this episode's for you. Welcome, Kathleen.

Kathleen Chu: Hello, Virginia.

Virginia: In your 20 years, who have you helped the most?

Kathleen: First-home buyers and investors, and the odd mum and dad downsizing.

Virginia: How do you help a first-home buyer, and when should they come to you?

Kathleen: As soon as they're thinking about buying their first property, so I can guide them through the process and make sure they're in touch with a broker to get pre-approved if they haven't already. I help with New South Wales purchases, mostly in Sydney but all over the state, and I explain the timing of contract reviews, the building-and-pest report, and the strata report if they're buying a unit.

Virginia: For a first-timer buying a unit in Sydney, what should they be aware of?

Kathleen: We make sure the day-to-day admin fund is healthy, and that the capital-works fund for long-term maintenance is healthy too — tens of thousands, if not hundreds of thousands for a bigger scheme. We check there are no structural defects or water-ingress issues, because they can cost a lot to fix, and that there are no disputes between lot owners. It's all in the strata report, which is about $250 and worth every dollar.

Virginia: How long are those reports?

Kathleen: Smaller schemes are about 150 pages; large schemes can run to a thousand, because they list every defect, issue, insurance and bit of history. A long report isn't necessarily a worry if the issues have been fixed — it just depends on the unit.

Virginia: When they upsize to a house, what changes?

Kathleen: We get a building-and-pest report — it costs a bit more than a strata report but tells you about structural issues and asbestos. It will also flag an unapproved granny flat, which you don't want falling on you to demolish or get approved once you're the owner. We ask the seller about any unauthorised work, sometimes there's a special condition in the contract, and we do council checks. If a granny flat was meant to be noted on the front page of the contract and isn't, that's obvious from the contract.

Virginia: What about downsizers and SMSFs?

Kathleen: Downsizers are a similar process — I still review the contract and the building-and-pest, and the strata report if it's a unit. With SMSFs you have to be careful about the entity that goes on the contract when you exchange; the bare trust isn't set up until you purchase, so the timing has to be right to avoid double-duty issues. Compliance is strict: business real property can be leased to a related party, but a residential SMSF property can't be used by you — it has to be leased out.

Virginia: What are your top three tips for investors?

Kathleen: Do your due diligence on any works you plan, to get equity and growth; have me check the contract and timeline thoroughly; and take your time to find the right property. Ask your questions before you enter the contract — afterwards you might find you can't put that granny flat on after all. Check the zoning certificate and the council planner for what you can and can't do, whether it needs approval, and whether it's heritage-listed.

Virginia: And renovations?

Kathleen: A lot of people renovate units before they move in, and they should get strata approval first — even for painting, floorboards, bathrooms or kitchens. If works that needed approval aren't approved and something goes wrong, the liability falls on the lot owner. It's the same with a granny flat built without approval — you have to knock it down or get retrospective approval, which isn't difficult, just more work than asking in the first place.

Virginia: Great tips — thanks, Kathleen. Up next I'll speak to Julianne Zammit from Finance on the Coast to continue the conversation, looking at the finance risks that can also derail a property deal.

Kathleen: Thanks, Virginia.

Credit & Legal Compliance Statement

Property & Mortgage Insights Australia (PMIA) publishes episodes and analyses as general observational and educational guides only. Nothing contained on this page or in the associated audio/video recordings constitutes personal financial advice, legal counsel, or personal tax advice. All numerical examples are anonymised case studies compiled for structural reference only. For specific lending advice tailored to your personal portfolio goals, secure an authorized personal consultation with an accredited finance broker.