Mortgagee In Possession (MIP)
-Looking to purchase a dev site that is MIP, with a bit of a twist.
-Company originally selling off plan, directors have had a fall out. Money owed to many creditors.
-The bank has initiated proceedings against the guarantor (is also a director of the company who was selling the project off the plan)
-the guarantor wants to sell it to us as MIP. He wants to exchange/settle simultaneously, using our funds to pay the bank and take over as MIP, thus becoming the vendor as MIP.
-The bank appears to be owed about 85% of the purch price, the rest approx $1m is excess funds.
-When we purchase from MIP do we obtain clear title on everything?
-what about previous pre sales?
-the previous company looks to be in financial trouble and as such has many creditors chasing them including OSR, ATO. It seems there may be more creditors than funds.
-Is there a way creditors could come back at us if they felt a fair market price is not achieved?
-any suggestions on better way to purchase?
-should we walk away as things are a little mirky?
-is the saying it walks like a duck, sounds like a duck, then is most likley a duck applicable?Thanks open to ideas..
wrx928.
wrx928
wrx928,
This is certainly a complex position, but unfortunately one that is not too uncommon. Before you embark on the purchase make sure you have some solid legal advice in your corner from an experienced commercial lawyer, as if it gets ugly and you are implicated then it will get very ugly.
An alternate strategy is to approach the Credit Restructuring department of the lender in question, and formally make an offer for the site. Then it may be seen as an arms length transaction, and you are purchasing the property from the true and rightful vendor being the lender.
For the lender, they do not want to be stuck with a white elephant. They will sell where it is to their advantage to do so. Once you have got your legal advice my course of action, having had exposure to Credit Restructuring with one of the major 4, make an offer subject to due diligence time frame, say 28 days where you can check feasibilty get construction quotes of your own, confirm council’s willingness to reassign the DA, and have your solicitor confirm or reaffirm pre-sales.
Without sound legal advice, sound planning and strong due diligence this project maybe the duck you think it is. DOn’t be one left carrying the duck, do you background work first, and you may if everything adds up pick up a sound project.The above is to be classed as general advice only. Independent legal and financial advice must be sought and relied upon to the exclusion of the aforementioned general advice in making a decision. The writer accepts no liability for reliance on general advice in decision making.
ThanksWade Greasley
Bluewater Financial Pty Limited
Residential and Commercial Lending Brokers
“Finance for Life”
[email protected]
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