Back in the ‘naughties’ (the 2000’s), budding vendor financiers were encouraged to become ‘transaction engineers’.

The ‘transaction engineering’ plan went:

  • The vendor financier finds a prospective seller, i.e. a seller interested in selling their property with vendor finance, and;
  • Enters into a joint venture with the seller to find a vendor finance buyer and structure the vendor finance sales arrangement;
  • Often $10,000 was the figure paid to the vendor financier for her/his services;
  • Once the vendor finance arrangement was setup and the buyers moved in, the vendor financier departs the scene, leaving the seller with happy buyers and some legal paperwork.

Let’s now have a look at how the story progressed from there, for one seller.

The Buyers are Paying – all looks good

The seller I’m referring to has given me permission to tell his/her story but has asked for anonymity. S/he was ‘helped’ by a vendor financier to sell her/his property with an Instalment (terms) Contract in 2009.

Luckily, before departing the scene, at least the vendor financier setup an account for the buyers to make their repayments into. Over the years the buyers had a couple of periods of hardship but they worked through them and developed into the kind of buyers we’d all like to have.

A Call in 2016

Earlier this year our seller got a call, saying the buyers were interested in working out how close they were to being able to refinance into a traditional loan and could they have a loan statement.

Unfortunately, as the vendor financier departed the scene, s/he didn’t mention the Instalment (Term) Contract had to be regularly administered. The results; since 2009 no statements had been provided to the buyers and no interest rate changes had been made, to name just two.

But it Does get Sadder

The departing vendor financier had not setup a system to ensure the buyers paid for Rates & Outgoings, as required by the Instalment (Terms) Contract.

The result; since 2009, the buyers had not been asked to reimburse over $27,000 in Rates & Outgoings bills.

The Seller’s Way Back

The Seller initially asked us, i.e. Vendor Finance Management (“VFM”), to just generate some loan statements. It was during the research we needed to do to get the statements ‘right’ that we discovered all the above. Since then, VFM has been able to:

  • Generate all statements back to 2009, including all interest rate changes;
  • Setup a Rates & Outgoings payment plan with the buyers, for future R&O bills;
  • Take on the future management of the Instalment (Terms) Contract for the seller.

If you’re unsure if the ongoing administration of your vendor finance arrangement is setup in accordance with all the relevant legislation, you may learn more about it on the VFM website.


Clients First – Always.