I have bought the house from hell.
Settlement was booked in tomorrow for the house that I purchased. After a nightmare of nearly 4 months of trying to get tenants to vacate and an ex-wife to leave the premises and to lift the caveat (obviously on settlement), we have been told that the Vendors bank will not settle because the vendor is short of funds.We purchased the property for $1060, 000 in Pagewood (p/c 2035) , exchanged about 4 months ago. During the time of delays because of the above, the vendors interest costs have risen. He obviously owes the bank more than the purchase price now.
Does anybody know what happens in this instance. Does the bank write a small balance off, lets say hypothetically its short $15k, or does the bank make the vendor take a personal loan to pay of the short fall.
The vendor is keen on settling however we believe he doesnt have the short fall to pay the bank. Can the bank reposess the house and then try and sell it for more than what I purchased it for?
There is another recent thread on here regarding a caveat and settlement problems.
The bank will be holding first security so their interest will take priority. What they will do will depend on how much the shortfall is etc. If it is a little bit then they may just allow the sale to proceed and they may try to recover the rest from the owner. If it is a fair bit and they think the house has been undersold they may try to resell the house again or try to get you to pay more.
Once the mortgagor takes possession then I think your contract will no longer be binding I beleive
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
terry can you post the link with settlement problems so I can read up on it.
The house was definitely not undersold. It was sold at public auction and at market value. The shortfall isnt huge, but I understand that the bank wants their money.
This house was on the market for 2 years but with no interest.(wonder why?) I must have been the sucker.
In this current market, would the bank try and resell it if only for a few thousand $$$$'s.
There's no point in pursuing legal action as this vendor has nothing left. I almost feel sorry for him as the delays with the tenants leaving the property have caused the interest to growHI
I don't have any links. You would have to look into some legal books. Maybe do some google searches on "mortgagee in possession". Find some legal cases.
I read a new case today, from VIC or SA where a mortgagee sold a house for $1000 because there was no reserve set at the auction. There is a court order in place preventing settlement at present.
If you are the person from the other thread then the problem arose because you knew there was a caveat on the property but you went ahead with the purchase. That would have been why it was on the market so long.
No use in crying over split milk now. You may have to wait a bit longer and then try to negotiate with the bank.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
The case I referred to above is Kousal v Suncorp-Metway Limited [2011] VSC 312
see http://www.commercialcourt.com.au/Lists/News/DispForm.aspx?ID=1671 with the link to the judgment.
This is a different sort of matter though. It relates to a judgment debt, not a mortgage, but you may gain some insight into the process.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
For sale by mortgagee in possession see ss 56-66 Real Property Act (RPA) http://www.austlii.edu.au/au/legis/nsw/consol_act/rpa1900178/
If the mortgagor is in default then the mortgagee may take possession, s 60.
s 61 the right to foreclose.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There is a NZ case, Canterbury Finance Ltd v Sagar Trust Ltd (1997) ANZ ConvR 119, which is given as authority for the view that a mortgagee will not be bound by a contract of sale entered into by a mortgagor, (unless consented). So the vendor's contract with you will probably not be binding on the bank once they take possession after a default.
see also
Law Mortgagees Queensland P/L v Thirteenth Corp P/L [1999] VSC 360
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VICSC/1999/360.htmlNational Australia Bank Limited v McFarlane [2003] VSC 26
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VICSC/2003/26.htmlTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks so much for all this info. Ill read up on it today. Yes im the one with the caveat, however, the ex-wife finally moved out as did the other tenants and we received notification from the ex-wife's solicitor that the caveat will be lifted. Low and behold now this matter has arisen. If its not one thing, its another. We are actually going to pull the pin and give him until Friday to settle. Its only a few thousand that he owes, so he can beg, borrow or steal the shortfall if he wants to sell this house. Its just dragging on now. thanks for all your help
Let this be a lesson to others.
Never buy a house with a caveat or if you do don't expect an easy settlement. A caveat s a warning that something is wrong.
Goodluck shoppingarigas. I think you were planning to move into this one too which makes it more stressful
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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