Due to some information received from the bank we signed a contract to settle on the 17th Jan. Now the bank is backing off and we may not be able to settle until the 23rd. Can the vendor just void the contract and claim the deposit, or are we entitled to delay and pay him some kind of detault interest.
Really appreciate some help here.
Thanks
Yes and Yes not a nice position to be in this time of year.
I would be getting your Solicitor to be liaising with the Vendors solicitors as soon as possible as you don't want too risk loosing your deposit.
Get immediate legal advice.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
That is still a long way off. What is the problem?
And what state is the property in?
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
Depends on your contract, most are conditional on approval of finance, so if the bank isn't ready to pay down the loan, then your finance is not finalised and the contract cannot proceed, check with your conveyancer/solicitor to find out exactly, as they are the contract people.
If you have an unconditional contract ( I have never had one without finance condition so not sure how this would work) then usually there is a default rate you must pay for every day past the contract date, I am not sure what this is but it is massive and can be in the thousands depending on how long it takes…
Finally if the bank has allowed the contract to go unconditional, meaning they have approved the loan and then pulled back, I would be looking to them for compensation due to any cost you incur. ( I had this on the first house I bought, it was my solicitors mistake, and they ended up wearing the default costs)
again, check with your conveyancer/solicitor to find out exactly… this is what you are paying them for, its like hiring a professional to make sure your house is built correctly and going down the pub to ask a tradie how it should be done, check with the professional first and then check here if you don't get what you are after, or don't agree with what they say… I say this because you are currently paying someone to give you legal and contractual advice, whereas most others here are not, and do not want to pay for it if they can get a suitable answer here.
Aussie Guy
A conditional contract is usually only a few weeks at most. What we probably have here is a finance fully approved and a delay in settlement (prob because of christmas).
You exaggerate about the penalty interest. It is usually about 10 to 15% pa. daily not much, and not much considering you would not be paying 6% to the bank this time either.
The bank doesn’t allow the contract to go unconditional, the purchaser does. The bank is not a party to the purchase. If the bank cannot meet their own deadlines then sometimes they pay compensation – usually only if their fault.
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
Hi CeeKay,
As others have mentioned, get your solicitor involved as soon as possible to find out what can be done.
It seems weird the bank gave you the go ahead and is now taking a step back?
Cheers
Tom
Many lenders have already filled their Settlement bookings and are struggling to take additional ones.
Just because the loan is unconditionally approved and the Letter of Offer and Mortgage Documents have been issued there is no guarantee that the lender will be ready to settle when you want.
As Terry mentioned the Bank are not a party to the Contract and therefore have no say in whether the contract goes unconditional.
All they do is approve a loan based on the information they have been given and it is upto the purchaser to decide whether the Terms as set out in the Letter of Offer are acceptable and decide whether theycan go unconditional.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Most likely the loan has been approved but they could not meet settlement deadlines ( hence why it's been pushed from the 17th to the 23rd)
There's still a long way to go for the 17th, i would ring up the bank and advise them of this deadline and threaten them with penalty interest- i have done it in the past for my clients and most of the major banks pay up OR gets their act together and settles on time!!!
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
True what you say Richard in terms of the bank not taking into account the purchasers proposed settlement date.
I know it is silly season and skeleton staff over the Christmas period, but over a month away and delaying it for almost a week seems strange if finance has been fully approved. There are some lenders that are still allowing documents to be returned now for Christmas settlement (of course that's what they say, whether it occurs is another story).
Cheers
Tom
Hi guys
We are getting advice today, but I really appreciate your input
Terry, we are unconditional, we are in Victoria.
The finance people at the bank assured us we would be fine for the bridging so we went ahead. But now they are saying the bank needs to secure the bridge on both the property we are buying and the one we are selling. We had the deposit released under section 27 so the agent could get paid. Now it appears that because we have done that we have to get the purchaser's OK to raise any funds on our current property. My husband had raised that question with the loans officer in the branch and she said it wouldn't matter and just to go ahead. Think maybe the bank's policy's changed regarding which properties to secure on. The regional manager who's now looking after us has never heard of this happening before
We think any talk of finance may spook the purchaser and they are more likely to wear a move forward, so that's where we're going first. If he won't do that we'll try to get his permission for the finance. We are going to explore all avenues. Already the vendor has declined to move back and let us rent for a week, but we are trying to find out whether his objection was to shifting the date or our renting.
Thanks again for all your advice.
Bridging loans complicates things…
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
Hi Carole
Sorry i am still not fully understanding the issue.
If the loan has been fully approved (irrespective of whether it is a bridging loan or not) and the loan documents issued then really there should be no problem.
Any senior member of staff should be able to get the Settlements department to take a booking even with less than a week to go.
I hate to say it sounds like the loan has not been fully approved yet.
I would never have gone unconditional on a say so from a Bank employee without getting the letter of offer in writing.
I wish you well but wouldn't let the lender off the hook for one minute.
Tell us the lender and we can certainly see whether we can recommend anything else.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Im in Richard's boat…i don't quite understand the problem your having Carole…
Having an unconditional contract and having an unconditional loan approval is completely 2 different situation!
From the sounds of things, you dont even need a bridging loan! as your about to settle (buy) and sell within a 2-3 weeks timeframe….not sure why the bank manager would even consider a bridging loan for such a short period…
With a signed contract ( selling) you should be able to get the bank to provide you with an standard unconditional approval without the bridge.
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Michael, i think if Carole tells us who the lender is we can figure out whether she has any chance of getting there in time.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Talking to our conveyancer yesterday I'm told that you have to tell the purchaser if you increase the loan amount because they've agreed to the Section 27 deposit release based on the figures you supplied, even though the borrowing is less than 80%. Conveyancer says normally you just tell them and ask they have any objection, then close the file because they never do. Unfortunately the bank want a letter from the purchaser or his solicitor to say it's OK. However I'm told that's not the law, we just have to tell, so I've put in a complaint to the bank laying out what happened, and they've escalated things.
The loan is approved subject to this so even if we don't get the purchaser to sign something (their solicitor has been less than helpful there in the past) I know I can now ask them to remove the condition of the loan now knowing it's not a legal requirement.
Michael, I don't understand what the alternative is. Do you mean when you're getting a standard mortgage? We will have no end debt.
This is one of the problems with using a conveyancer. Did you get legal advice on the release of the deposit?
It is the bank’s money so they can make up the rules. Complaining may or may not help. Its like you asking me to lend you money and I say I will if you do x. There may be no legal requirement to do x, but that doesn’t mean I have to lend you the money.
You have to act fast. Maybe a different lender?
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
This proves the point that a good mortgage broker is worth their weight in gold. I’d never talk to the banks alone, too hard and scary.
I am still at a loss to see the issue …..sorry maybe i am a bit slow (comes of being in the UK in the cold and wet).
Any normal lender wouldn't have a problem and it just seems to me like the lender is making up these issues.
If the loan is only conditionally approved then you still need to have the formal letter of offer and mortgage documents prepared and sent out and you will have to execute them get them back and then have your Solicitor book the settlement.
It just isn't going to happen in time.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Wonder who the lender is? Probably a mortgage manager
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 i don't think so.
To me it is very likely it could be one of the Big 4 as it just seems like they have no idea as to what is needed here.
Let's face it the Loan officer is probably more concerned with getting her Xmas shopping done than finding a solution.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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