A limited recourse borrowing arrangement (LRBA) is a financial arrangement which enables an SMSF to purchase property or shares with borrowed money. It is limited recourse because if the trustee defaults on the loan, the lender’s recourse is generally limited to the asset acquired which protects the value of the other assets of the fund. To achieve this the asset acquired must be held on trust until the loan is repaid. A bare trust is established to hold the asset as custodian but the SMSF has full beneficial interest in the asset.