In this article
Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The offer usually arrives through someone the investor already knows: an accountant, a friend from a seminar, a neighbour who has done well. A developer has a site on the Gold Coast or in Logan, a plan for townhouses, and room for a few investors at $50,000 or $100,000 each. The return is described as fixed, the term as short, and the investment as backed by property.
Many such projects are honest. Some fail for ordinary commercial reasons, and a few are not what they claim. In a case sentenced in the District Court at Southport on 29 September 2026, the Australian Securities and Investments Commission reported that a former Queensland developer who controlled about 18 companies across five projects, funded by 190 investors, had dishonestly applied more than $2.2 million of their money. Many of those investors had used their self-managed super funds.
This guide is about the checks that can be made before money moves. It explains why funding a development is a different thing from owning property, what documents and licences the law expects, the questions ASIC tells investors to ask, and the extra rules that apply when the money is superannuation. It describes general principles and is not financial advice. Whether an investment suits a particular person is a matter for a licensed adviser.
Sources: ASIC media release 26-231MR, 29 September 2026; ASIC, "Investing in unlisted property schemes?", November 2012.
Funding a project is not owning property
The phrase "backed by property" does a great deal of work in these offers, and it is worth being exact about what it means.
A person who buys a house or a block of land becomes its registered owner. Their name is on the title, and nothing can be done with the land without their signature. A person who puts money into a developer's project almost never gets that. What they get is a share in a company, a unit in a trust, or a loan to one of the developer's entities. The land is owned by the company or trust. The investor owns a claim against it.
Related readProperty spruikers in Queensland: seminars, commissions and the rulesThe difference shows when something goes wrong. If the project runs over budget or cannot be sold, the land is first of all security for the bank or other lender that financed the construction. Investors who hold shares or units come after the lenders and other creditors. Investors who lent money may or may not hold a mortgage, and if they do it may rank second.
ASIC's Moneysmart site puts the point briefly in its page on property funds: some funds invest in property development, which means there are construction and development risks. Its longer guide to unlisted property schemes lists what those are. Projects can be delayed or run over budget, property values can fall, debt may need to be refinanced at a bad moment, and capital may not be returned when the investor asks for it or when the scheme ends.
The structures an investor is offered
The legal form of the investment determines which rules protect the investor, so the first question is what, exactly, is being bought.
| Form | What the investor holds | Where they rank if it fails |
|---|---|---|
| Shares in a project company | Part ownership of the company that owns the land | Last, after every creditor |
| Units in a trust or scheme | A share of a pool managed by someone else | After the scheme's lenders |
| A loan to the developer's entity | A debt, with or without a mortgage | Depends on the security, if any |
| A joint venture agreement | Contract rights to a share of profit | Depends on the contract |
General description. The ranking in any real case depends on the documents and the security actually registered.
Where many investors pool money and someone else runs the project for them, the arrangement is likely to be a managed investment scheme under the Corporations Act. A scheme offered to retail investors generally has to be registered with ASIC, be operated by a company holding an Australian financial services licence, and be offered through a product disclosure statement. Registration, Moneysmart is careful to say, does not mean ASIC endorses the investment.
Many development offers are structured to sit outside those requirements. They are made only to investors classed as wholesale or sophisticated, or to small numbers of people, and they come with an information memorandum in place of a product disclosure statement. That is lawful where the conditions are met. It also means the investor has stepped outside the protections designed for retail investors, including the detailed disclosure rules described below. An investor who is told they qualify as a wholesale client should understand that the label reduces their protection. It is not a compliment.
Related readRental scams in Queensland: the warning signs before you pay a bondThe document that says where the money goes
In the Southport case, the ABC's court report recorded, the information memorandums given to investors said that their money would be used only for the project they had chosen. The fraud consisted of moving it elsewhere: to other projects, and to the developer's personal benefit.
That detail points to the most useful thing an investor can read for. Whatever the document is called, it should answer four questions in plain words.
Which legal entity receives the money? It should be named, with its company number, and it should be the entity that owns or is buying the land.
What may the money be spent on? A promise that funds are for one project is worth having only if the document says so and names the project.
Who holds the money before it is spent, and on whose authority is it released? In the Southport case the developer created false letters of authority in investors' names, which allowed funds held by a solicitor to be released for unrelated purposes, according to the ABC's report. An investor who is asked to sign an authority should know exactly what it permits, and should be suspicious of any arrangement in which someone else can sign for them.
What does the investor receive in return, and when? A share certificate, a unit certificate or a registered mortgage is evidence. A line in a spreadsheet is not.
A promise that money is for one project is only as good as the control on its release
Ask who holds the funds, who can authorise their release, and what record the investor receives each time money moves. If the answer is that the developer controls all three, the promise rests on the developer alone.
Checking the people and the licence
ASIC's Moneysmart site publishes a routine for checking an investment before committing to it, and all of it can be done for nothing in an evening.
Related readTitle fraud: how Queensland's register protects an owner's home- The licenceSearch ASIC's professional registers for an Australian financial services licence, and match the name and number.
- The companyConfirm it is registered on ASIC Connect. Registration alone does not mean it is licensed.
- The peopleSearch the banned and disqualified register for the directors and promoters.
- The alertsCheck Moneysmart's investor alert list for the name of the company or product.
- The schemeIf money is pooled, confirm the managed investment scheme is registered, and read its disclosure document.
Two cautions accompany the list. Contact details should be verified independently, not taken from the offer document, the email or the advertisement. And a licence is a threshold, not a recommendation: Moneysmart notes that holding one does not mean ASIC endorses the company or that the investment is safe.
What the licence does provide is recourse. A licensed provider must have a process for resolving complaints, and investors can use it. With an unlicensed provider, Moneysmart says, it is harder to get help if things go wrong.
For a property development there are checks on the project as well as on the promoter. A title search shows who owns the land and what mortgages are registered over it. In the Southport case, ASIC reported, one investor was told a project was on track when the developer knew the land for it had already been sold to an unrelated party. A title search, which costs under $30, would have shown the change of owner. The council's online development application register shows whether the approval described in the offer exists. And a search of the Queensland Building and Construction Commission's register shows whether the builder named holds a licence.
The six things ASIC wants disclosed
For unlisted property schemes offered to retail investors, ASIC has set out what a disclosure document should say, in the form of six benchmarks. A scheme's product disclosure statement should state whether it meets each one and, if it does not, explain why not. The benchmarks do not bind a wholesale offer, but they are a ready-made list of what a careful investor would want to know about any development.
Related readMoney held by a Queensland agent: trust accounts and the claim fund| Benchmark | What it asks | Why it matters in a development |
|---|---|---|
| Gearing policy | A written policy on borrowing, and compliance with it | Debt ranks ahead of investors |
| Interest cover policy | A written policy on the ability to pay interest | A project earns nothing until it sells |
| Interest capitalisation | Interest should not simply be added to the loan | Capitalised interest grows through delays |
| Valuation policy | Timely valuations by qualified experts | Both "as is" and "as if complete" values should be shown |
| Related party transactions | A written policy and monitoring of conflicts | Developers often pay their own companies |
| Distribution practices | Distributions only from cash from operations | Payments funded by borrowing or new money are a warning |
Source: ASIC, "Investing in unlisted property schemes?", November 2012. The third column is this magazine's plain-language reading.
The same guide gives a yardstick for the first of them. The gearing ratio is a scheme's interest-bearing debts divided by its total assets. Financial advisers, ASIC says, often regard a ratio above 60 per cent as highly risky, and a ratio above 100 per cent means the scheme owes more than it owns.
The valuation benchmark deserves particular attention in a development. A site is worth one amount today and a larger amount once the buildings are finished and sold. An offer that quotes only the completed value is describing a hope. ASIC's guide says development assets should be shown on both bases.
And the last benchmark is the one most relevant to fraud. A scheme that pays regular returns to investors before it has sold anything must be finding the money somewhere. If the source is borrowing, or the contributions of newer investors, the returns say nothing about the health of the project.
When the money is super
Many of the investors in the Southport case used self-managed super funds, and that is common. A fund's balance is often the largest sum a person controls, and an offer to put it "into property" has an obvious appeal.
Superannuation law adds a layer of obligations that fall on the fund's trustees, who in a self-managed fund are the members themselves. The Australian Taxation Office, which regulates these funds, set out its concerns about property development in a regulator's bulletin issued in 2020. A summary by the firm SUPERCentral lists them.
Trustees must be able to show that the investment is made solely to provide retirement benefits for members, the sole purpose test, and not to help a business or another party. The ATO's example is a fund that stops paying a member's pension in order to put more capital into a struggling development.
Related readAnti-money-laundering rules: what an agency's program must containDealings must be at arm's length. Where a related party is involved, the law presumes they are not, and the trustees need documents to show otherwise. Income from an arrangement that is not at arm's length can be taxed at the top rate instead of the concessional super rate.
An investment in a related trust or company can count as an in-house asset, a category the law limits strictly, unless the entity meets a set of conditions about not borrowing, not running a business and not dealing with related parties. The ATO's view is that once those conditions are broken the exemption cannot be restored.
And the trustees must keep records: evidence that dealings were at arm's length, that the fund's deed and investment strategy permit the investment, and that payments related to the development's expenses.
The practical consequence is that a failed development can cost a super fund twice: once in the money lost, and again in penalties if the investment was made in a way the rules do not allow. The person who recommended the investment does not carry that responsibility. The trustees do.
In a self-managed fund, the members are the trustees and answer for the investment
A promoter's assurance that a structure is "SMSF compliant" does not shift the obligation. The fund's own adviser or auditor should be asked before the money is committed, not at the next annual audit.
Signs that deserve a second look
No single feature proves that an offer is dishonest. Several of them together are a reason to slow down. Moneysmart's list of warning signs for investments in general includes a provider with no financial services licence or one who says none is needed, constant pressure to decide quickly, very high returns, and reliance on testimonials.
The cases involving developers suggest some that are specific to property.
Related readAUSTRAC sends formal notices to agencies that have not enrolledThe same person is the developer, the director of every company, the manager of the money and the source of all information. In the Southport case the developer was the sole director of about 18 companies, ASIC reported.
Money for one project is described as temporarily supporting another. The sentencing judge in that case observed, in ASIC's account, that paying funds to the creditors of other projects is as good as paying oneself.
Returns arrive on time while the site stands idle.
Requests for the documents an investor is entitled to, such as a unit certificate, financial statements or evidence of the mortgage, are met with reassurance instead of paper.
And an investor is asked to sign an authority or a variation without a clear explanation of why it is needed.
If something seems wrong
An investor with doubts about money already committed has several places to turn, and time matters.
The first step is to ask, in writing, for a statement of where the money is and what it has been spent on, and to keep every reply. The second is to obtain independent legal advice about the investor's rights under the documents, which may include the right to information or to call a meeting.
Concerns about misconduct can be reported to ASIC. In the Southport case, the ABC recorded, the offending came to light through reports made to the regulator and not through anything the developer disclosed. ASIC obtained Federal Court orders freezing assets in July 2021, liquidators were later appointed to the companies, charges followed in December 2023, and the sentence was passed almost three years after that.
That timeline carries its own lesson. The legal system can punish a fraud, and it did. By the time it acts, the money has usually gone. The court heard that the developer had been made bankrupt and that no restitution had been recorded. The checks that protect an investor are the ones made before the transfer, when a title search, a licence search and a careful reading of one document cost almost nothing.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
