Caveat removal - Vendor said to be handed at settlement but bank requires before that

Hi guys,

I'm buying my first home and currently got stuck in this situation. There's a caveat on the house put by the ex wife of the vendor and his conveyancer has confirmed that it will be handed over at settlement. The vendor's REA also confirmed to me when I signed the contract that this is pretty common and there's nothing to worry about.

However the bank is now saying that they require a copy of withdrawal of caveat. They want to see the document and verify it before the settlement can even be booked.

Now my conveyancer has contacted the vendor conveyancer who has contacted the caveator (the ex wife)'s lawyer requesting this copy, who has yet to get back to us.

I was quite confused and as I did not get enough information/explanation from related parties, I did some research myself. I think I understand the bank position that the process of removing a caveat would take at least a few days to complete and so it's reasonable for them to verify it first before allowing the settlement to happen.

However from the ex wife point of view, I think it would also be reasonable for them to think that it's risky to apply for removing the caveat before receiving the cheque of their part of the house, which could only be handed to them at settlement, particularly given that they will not be able to lodge the same caveat again in the future. But again, even if the bank allowed the settlement to happen without seeing the caveat removal first, which they surely don't, the ex wife, or her lawyer, cannot just press a button on the spot to have the caveat removed instantly when they see the cheque on the day, can she?

I imagine she would sign some contract with the vendor (ex husband) to guarantee her part when the house is sold, and would remove the caveat for it to be settled. But if so why would she leave it until this late, only a week after the holiday to settlement and has not yet to get back to the vendor conveyancer?

Another thing I don't understand is why the vendor conveyancer said that the caveat removal would be 'handed over' at settlement, as if it's a certificate or something. If the caveat has already been removed, anyone can then just go to Land Victoria and order a title search and verify it themselves, can't they?

Could somebody please shed some light on what's actually going on here and how this 'deadlock' can be resolved, and/or if I missed something, because this matter seems to be more complicated than what I thought a 'common' issue would be.

 

AFAIK no divorced couples have ever sold a house. The funds from settlement have never been held up either. What are the vendor's instructions for the settlement cheques/court order?

You probably won't get your answer from either party's solicitors until after 8 Jan 18.

@KateAshmor

 

Thanks for the quick reply @Scott No Mates. Regarding the vendor's instructions, my understanding is they will require 5 or 6 cheques on settlement, and at least one of them will be for the ex wife.

This is my dilemma. The settlement is on 16 Jan 18. I'm currently renting and will need to give the landlord's agent at least one month notice before I move out. I originally thought giving the notice of moving out at the end of Jan 18 was pretty safe as I would have 2 weeks to move. However given this situation I'm not sure if I should wait until the actual settlement day and see how things will be.

If I wait and things turn out to be ok then I may end up losing a whole month rent of Feb 18. But if I don't wait and things are not going to be as smooth as I hoped and settlement is delayed I may end up having no where to live for weeks.

EDIT: FWIW, the caveat put by the ex wife since 2012 and she's currently living in the property with her partner even though the sole vendor is the ex husband. The REA told me she said she will move out before settlement though.

 

Why is 1 month notice required? (NSW holdover requires only 21 days notice).

How many days of dual tenure are you prepared to bear ie before you hand back the rental? If notice is too short/you require more time and new property hasn't settled it'll take weeks for an eviction. (plenty of threads of tenants not leaving on time).

 

caveats are removed by a withdrawal of caveat form. This will be handed to the bank at settlement and it will be the lodge that lodges it. I think it would be reasonable to ask for a copy of this form from the vendor and to give this to the bank. The bank would be worried that it won't appear at settlemend and therefore they won't be willing to settle - you shouild be worried too.

 

I'm not sure but it was stated in my rental contract. The landlord is quite nice to me so I prefer to move on time or by the time given in the notice, hence my dilemma.

Could you please elaborate? My conveyancer said something similar to me, but I find it somehow different from what I read on Land Victoria. According to their guide, the withdrawal of caveat form must be signed and lodged by the caveator or their solicitor and I assume it would take a few days, hence my confusion of the deadlock situation in the original post. I can't imagine how can the bank of the buyer can just get a copy of the form before the settlement and then just take the original form on the day and lodge it themselves?

 

Just checked notice period Victoria - 28 days.

 

It is the same as mortgages. They are not discharged at settlement, but a signed discharge is handed over and the registration occurs much later than settlement.

 

Thanks. I was not aware of that. I'll check it out.

Thanks, I still don't know how this caveat removal works exactly, but if I understand you correctly then there's no such 'deadlock' like what I imagined and hopefully it will be a smooth settlement.

 

being a divorce you should assume it won't be a smooth one. In fact there may be a good chance it will not settle at all.

 

Thanks Terry, the vendor's REA told me the ex wife is moving out next week so hopefully there won't be too much drama. However I'm not going to notice my landlord until I can be sure that the settlement is done, which unfortunately will cost me a few more weeks rent.

Also after reading your posts in an old thread in somersoft I think I understand the situation better now. But now that I understand that there's a gap of at least one or two weeks to clear and transfer the title to my name, I need to decide whether I should lodge a caveat myself to prevent a Black vs Garnock case which may happen during this critical time.

House hunting was stressful enough and I thought that I could be relaxed when I signed the contract, but it seems to me now it's just the beginning.

 

@Krato, my last IP had 3 caveats on title then had another lodged after my offer was accepted. The property was also the security property for a commercial lease and was subject to a sale or seizure order. It was a bit of work to get the property to settlement but settlement actually happened within the contracted time frame. That said, we had no idea when settlement would happen until 2 days before, so there was a lot of uncertainty.

 

Thanks for sharing @Perthguy. Just to share my experience back, the settlement has gone smoother than I expected. The solicitor of the seller's ex-wife has provided a copy of the withdrawal form almost a day before the settlement, just enough time for it to be booked with the bank.

My understanding is they also came late to the settlement to hand the original form, but it eventually happened and the settlement's completed without drama.

 

Glad it got sorted. This happens all the time and caveats are generally removed by agreement on settlement.

 

I recall a meeting. Exe's in adjoining offices.

1. He had to sigh transfer and hand to her. He wanted her ASIC resignation signed first.
2. She had to withdraw as trustee Director of SMSF. She wanted transfer first.

Neither wanted to be in the others presenc which would have been easier for an exchange.
Many hours and nobody wanted to blink. Absolutely no way.

Solution. We bought a third party lawyer in who acted as go between and held BOTH items and exchanged them.

 

That's great news! I am really glad to hear you settled.