What counts as a sale?

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Each GPS loan has a set of construction and sales milestones to assist GPS in monitoring the loan’s status.

If the Borrower is not meeting the milestones, then GPS has advanced warning to pay extra attention to the loan and deal with any potential problems before they have the chance to arise.

GPS has strict guidelines on what counts as a sales contract when ticking off milestones.

As stated in the conditions for each GPS loan:

“A qualifying sale contract is any contract that meets the minimum conditions which include, but are not limited to:

  • Evidence of a deposit of 10% of the contract value being held in trust as confirmed by the Borrower’s solicitor, who is to provide an undertaking not to release the deposit without the written consent of GPS;
  • The contract price being not less than 95% and not more than 110% of the “as complete” valuation of the property;
  • The completion of the contract being unconditional except for the completion of construction or, if completion by the purchaser is subject to finance, the provision of a pre-approval for finance from an acceptable lender;
  • A sunset clause allowing for a reasonable construction period; and
  • A satisfactory review by our solicitors of the terms of the contract.”

So when a loan is stated as having “four sales” you can be sure that, unless otherwise stated, each of those sales has achieved the above conditions.

Our Portfolio Managers review each contract, along with special conditions, and also attempt to identify the purchasers (owner occupiers, local, interstate, etc) where possible to determine any further potential risks.

With this thorough due diligence, GPS has experienced little of the pre-sales settlement risk mentioned in recent media reports.

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