If you invest in property syndicates, unlisted unit trusts or private mortgage funds in Australia, or advise family members who do, this article is for you. These investments often come through personal networks, with paperwork and a short deadline.
Many investors are comfortable with property risk. The legal risk is different: it sits in the structure, who controls it, what rights investors actually have, and what happens when a project runs late or a fund freezes redemptions.
Common structures
Most private property investments in Australia use one of three vehicles:
- Unit trusts. Investors hold units in a trust that owns the property or makes the loans. A trustee or manager runs it under a trust deed.
- Limited partnerships. Investors are limited partners, and a general partner manages the venture. Limited liability depends on the partners staying within the rules of the partnership legislation.
- Companies. Investors hold shares in a company, often a special purpose company for one project, governed by its constitution and a shareholders agreement.
Each gives investors different rights to information, votes, removal of the manager and exit. What the documents say matters more than the label.
Registered and unregistered managed investment schemes
Many pooled property investments are managed investment schemes under Chapter 5C of the Corporations Act 2001 (Cth). ASIC explains that, generally, a scheme must be registered if it has more than 20 members or is promoted by someone in the business of promoting schemes. A scheme need not be registered where interests are issued only to wholesale clients, among other exceptions.
A registered scheme must be operated by a responsible entity: a public company holding an Australian financial services licence. It must have a constitution and compliance plan meeting statutory requirements, and the responsible entity owes statutory duties to members. An unregistered scheme does not carry these features. Investors in an unregistered scheme rely mainly on the trust deed, the general law and the manager’s integrity.
Following the collapse of some managed funds, the Federal Government announced reforms to managed investment scheme governance in August 2026, including reporting when redemptions are frozen. These had not been legislated at the time of writing.
Wholesale and sophisticated investor status: what you give up
Private offers are often made only to “wholesale” or “sophisticated” investors. The Corporations Act contains several such tests, including in section 761G for financial products and section 708 for offers of securities. They include an individual wealth test, usually supported by a qualified accountant’s certificate, and a test based on the investor’s experience as assessed by a licensee. The financial thresholds have been reviewed several times and should be checked when you invest.
Qualifying as a wholesale investor gives access to more offers. But it also means many retail protections may not apply, such as a regulated product disclosure statement, design and distribution obligations, registered scheme protections, and in some cases access to external dispute resolution.
Documents to review
Key documents and points include:
- The information memorandum or PDS: the project, the risks and any reliance disclaimers.
- The trust deed or constitution: the manager’s powers, investors’ voting rights, and how the manager can be removed.
- Any unitholders or shareholders agreement: transfer restrictions, pre-emptive rights, drag and tag rights, and deadlock.
- Related-party arrangements: whether the sponsor’s associates are the builder, lender, valuer, property manager or selling agent.
- Fees: all fees charged and how they are calculated.
- Gearing: the level of debt and what triggers a loan default.
- Valuation: who values the assets, how often, and on what basis units are priced.
- Exit and redemption: whether you can redeem at all, when the manager can suspend redemptions, and the expected term.
- Default and capital call provisions: whether you can be required to contribute more money, and what happens to your interest if you do not.
For private mortgage funds, also ask how loans are selected, what security is taken, whether you are exposed to a pool or a single loan, and how arrears are reported.
Due diligence on the sponsor
The sponsor is often the biggest factor. Investors may want to know its track record, licences, directors, any litigation or regulatory history, and how much of its own money is invested alongside yours. Public searches of ASIC records, court lists and land titles can help.
Foreign investor issues
- FIRB: a foreign person acquiring an interest in an entity or trust that holds Australian land may need foreign investment approval, depending on the interest and the land.
- Withholding: distributions to foreign residents may be subject to withholding tax, including under the managed investment trust rules where they apply.
- State foreign surcharges: Victoria and other states may impose surcharge duty and land tax on trusts with foreign beneficiaries, which can affect the whole trust’s returns.
When things go wrong
If a project stalls, a borrower defaults or redemptions are frozen, investors’ options depend heavily on the documents. They may include calling a meeting, seeking information, voting to replace the manager, or bringing a claim for breach of trust or misleading conduct. Sometimes a liquidator or receiver is appointed. Members of a registered scheme have additional statutory rights. Acting early, and with other investors where appropriate, can matter.
Questions to ask before you sign
- Is this a managed investment scheme, and is it registered?
- Am I being treated as a wholesale investor, and which protections do I lose?
- Who controls the vehicle, and can investors remove them?
- What related parties are paid, and how much do fees reduce returns?
- How much debt is there, and what happens if the lender calls default?
- When and how can I get my money out?
- Do FIRB, withholding or foreign surcharges affect me or the trust?
- How is my interest held, and what happens to it in my Will or estate?
Frequently asked questions
Should I get a legal review before investing in a property syndicate?
A legal review can help you understand the structure, your rights and the risks in the documents before you commit. It does not assess whether the project will succeed commercially.
What is an unregistered managed investment scheme?
A pooled investment not registered with ASIC, often because it is offered only to wholesale investors. Investors usually have fewer statutory protections.
Can I get my money back from a unit trust early?
It depends on the trust deed. Many property trusts have limited or no redemption rights, and managers often have power to suspend redemptions.
How we work with property investors
We act for individual and family investors, family offices and their advisers. Typically, we review the offer documents before investment and explain the structure, the investor’s rights and the points that may need clarification or negotiation. Where something has gone wrong, we help investors understand their position under the trust deed and the law. Matters we handle include, for example, a family offered units in a development trust by a business contact, an investor asked to sign a sophisticated investor certificate, or unitholders whose redemptions have been suspended. We also consider how the investment is held and how that fits with the family’s Wills and succession plans. We do not advise on whether to invest; we work alongside the investor’s licensed financial adviser.
Every family’s situation is different, and the answer often turns on details. Book a consultation so we can review your documents and circumstances before you act.
How Chua Tan Associates can help
Chua Tan Associates reviews property syndicate, unit trust and private fund documents for investors in Australia and Asia, and assists investors when a project or fund runs into difficulty. Justin Chua trained in accounting (Bachelor of Commerce, accounting major), is an affiliate member of STEP (the Society of Trust and Estate Practitioners), and advises on the legal and tax structure of family wealth together. He is a Nationally Accredited Mediator and an Accredited Family Business Advisor, which helps where investors and sponsors need to resolve a dispute. We work with the investor’s accountant and registered tax agents, and with lawyers in Asia. We advise in English, Mandarin and Cantonese.
Important: This article is general information only and must not be relied on. It is not legal, tax or financial advice, does not take your circumstances into account, and may not reflect changes in the law after publication. Laws of other countries may also apply. Do not act or refrain from acting on the basis of this article. Reading it or contacting us does not create a lawyer–client relationship. Please book a consultation for advice on your situation.
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Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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