MORTGAGEE IN POSSESSION
We recently had a client who was a first home buyer interested in purchasing a property which was being sold by the bank to recoup the mortgage which had been unpaid by the owner.
This is known as settlement of a mortgagee sale. These types of sales are often more complicated than a standard sale.
Firstly most banks are trying to recoup their loss and the contract will often come with conditions that are specific to that transaction which could include restrictions such as a purchaser being unable to move in prior to settlement and the purchaser having to accept that the bank has no knowledge of the property itself and requires the purchaser to acknowledge that the bank will not provide information about the property itself.
Secondly, and of more concern, is the fact that these types of settlements are often delayed for various reasons. In NSW it is generally the case that if settlement is delayed by the vendor then no penalty interest or compensation will be paid to the purchaser for the delay.
Where a person has failed to pay their mortgage, there are often caveats on the title from various secondary mortgage holders which can result in a delay at settlement or a failure of settlement altogether.
When buying property from a mortgagee/bank in possession, a purchaser may obtain a good price however this should be weighed up against the risks involved.
In our client’s matter, there were multiple caveats on the title and our client decided not to proceed due to the difficulty in obtaining any certainty on whether those caveats would be withdrawn in time for settlement and the possible costs involved in such a transaction.
Legal advice is always recommended when contemplating the purchase of a property but it becomes even more important when buying from a mortgagee in possession.
Email us now with your contract for a free preliminary advice at hello@eConveyancingNSW.com.au