Buying a mortgagee in possession sale

Hi, I am looking at a property in Sydney that is being sold by mortgagee in possession not by the vendor. And its not the bank selling it it is being sold by another company who had a caveat on the property (or a second mortgage). Is there a risk buying something like that? My solicitor says I need to make sure there aren't any court proceedings going on against the property which may create a problem for me in the future and cause the property to not sell.

 

There is a risk and you should seek legal advice. See Black v Garnock NSWSC where a purchaser wasn't able to settle - actually the settlement took place, but they could not get title transferred as someone else registered an interest in the property after settlement and before registration.
Not sure how electronic settlements has changed this now.

 

You're buying from a second mortgagee? Yeah I hope you know what you're doing or have really good legal and practical advice going into it.

 

The property is vacant which means owner has moved out. And my solicitor has recommended getting title insurance. Does that protect me from events like that? @Terry_w

I am definitely talking to the solicitor. What can go wrong as long as I am able to transfer the title? @thatbum

 

This is only from my experience as i bought a property 25 years ago in some ways like this the title holder was in jail ..there was a caveat on the property from the ATO ..and his mother was the title holder ,and the real estate could not lie straight in bed but there was no 2nd mortgage ..The hard part was getting the caveat lifted as the contract went belly=up 4 times it may be a lot harder within the 2 mortgage set-up ..
Still have that property ..

 

Yes but that's the hard part. Why would the first mortgagee allow you to transfer the title? They'll want something in return I suspect.

 

The first mortgagee is one of the big 4. Apparently the owner got loan from them. The second mortgagee (the one selling it) is an investment firm they don't give loans to consumers. It looks to me that the owner got some business investment from them in exchange of a caveat at their home that went belly up.

@thatbum shouldn't my solicitor be able to find out all these details? He should be able to talk to the bank's solicitor if they have an issue ? My solicitor does say that there is no way to find out if the owner has any court proceedings against it.

so who was the title holder? He or the mother?

 

The Mothers name was on the title..

 

It's a title Trinity: The jailbird, the mother and the caveat spirit. Each one of them is the title holder.