Mortgagee sale contracts may cause delays.
A mortgagee sale is one in which the owner of the property has had the property seized by their bank and the bank has sold it as mortgagee in possession. It is important to understand the situation that surrounds this type of sale and how it could affect a buyer.
This type of sale normally arises due to the owner being unable to meet their mortgage repayments and their bank taking possession to sell the property and recover their debt. In a lot of situations, it is not just the bank that is owed money, there may be other debtors that also want to recover a debt. For them to do this they may lodge a caveat over the property, claiming their interest.
If a caveat is lodged on the title unexpectedly, then it needs to be lifted prior to or at settlement. To commence the process of lifting the caveat, a 21-day notice is sent to the caveator to arrange for the caveat to be lifted. This loss of time may well eat into the forecasted settlement date, and create penalties due to late settlement. Your settlement agent will advise you as soon as they become aware of any possible delay, but you need to know that this situation could occur right up to the day of settlement.
Most importantly, when writing the contract of sale, ensure the settlement date on the contract is achievable.