The Federal Government will ask the Senate to consider challenging Bob Day's election to the Upper House in the High Court.

Key points: Senate President says "difficult constitutional questions" surrounding Bob Day's election have been raised

Senate President says "difficult constitutional questions" surrounding Bob Day's election have been raised Constitution bans election of parliamentarian with "direct or indirect pecuniary interest"

Constitution bans election of parliamentarian with "direct or indirect pecuniary interest" Family First says it has only been made of the allegations this week

The ABC understands the concerns relate to a potential financial interest the former Family First senator had in his Adelaide electoral office, and whether it had breached the pecuniary interest rules for parliamentarians.

A pecuniary interest relates to any financial interest an individual holds.

Mr Day has told the ABC he sold the Kent Town property after first being elected to the Senate in 2013, when it became clear he could not own the property under the rules.

Government sources said that last December, the Commonwealth entered into a lease agreement with the new owner of the property, Fullarton Investments, under which no rent would be paid by the Commonwealth.

That was because former Labor senator Don Farrell's office was still vacant and rent was being paid by the Commonwealth, but Mr Day did not want to move in.

However, Mr Day's company and family trust loaned Fullarton Investments money to purchase the property — and are ultimately liable for a National Australia Bank mortgage on the property.

The Commonwealth terminated the lease in October this year.

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The ABC understands the Government received legal advice last week that the liability may be an indirect pecuniary interest, triggering concerns about the validity of Mr Day's election to Parliament.

This afternoon, Senate President Stephen Parry wrote to all senators about Mr Day's immediate resignation from Parliament.

But Senator Parry said there were concerns about whether appointing Mr Day's replacement could follow the usual procedures.

"I am considering information which raises difficult constitutional questions relating to the composition of the Senate, and I am seeking further advice before I put the matter before the Senate on Monday," he said in an email.

Mr Day has told the ABC he has received legal advice he is not in breach of the rules.

Attorney-General George Brandis and Special Minister of State, Scott Ryan, said the Government would ask the Senate to consider referring the matter to the High Court when Parliament returns on Monday.

Family First has 'no prior knowledge of allegations'

Family First said it had been made aware of the allegations on Tuesday.

"Family First has had no prior knowledge of these allegations, and Mr Day has denied that any pecuniary interest exists or had existed," a spokeswoman said.

"Family First is seeking legal advice on the matter and as such it is inappropriate to make any further comment at this time."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 9 minutes 4 seconds 9 m Bob Day may not have been qualified to run for parliament at the July federal election

The Australian Securities and Investments Commission records show Fullarton Investments' director is Colin Steinert.

It is understood Mr Steinert was a project manager for one of Mr Day's construction businesses, Homestead Homes.

The ABC has contacted Mr Steinert for comment.

Homestead Homes was a part of the Home Australia Group, which collapsed last fortnight leaving hundreds of unfinished properties across the country.

Mr Day was a major shareholder in the company.

'Significant delay' in passing legislation

Sorry, this video has expired Antony Green says if Bob Day is disqualified his seat cannot be filled by Family First appointing another senator

ABC election analyst Antony Green said if the matter was referred to the High Court, it would "significantly delay [Government] attempts to get legislation passed".

"One of the questions is whether this is a casual vacancy or is this a disqualification to be a member, if you're disqualified to be a member you're disqualified to be a candidate as well," he said.

He said that if Mr Day was disqualified, his seat could not be filled by Family First appointing another senator.

Senators can be replaced by another member of their party when they resign, after the approval of their state or territory parliament.

"It comes down to whether the High Court would accept the ticket still exists or would it say the ticket doesn't exist and therefore the preferences can't flow to the second Family First candidate," Mr Green said.