Vender of deal in trouble

hi all wondering what’s people’s thoughgs are !
Situation is I bought a property with a long settlement 9 months
Plan is to Reno it and on sell it and have two settlements the same day . The vendor is having money issues I believe and banks are closing in on him so Iam told by him and asking for a settlement date as he wants to settle early

We have a contract of sale with agreeements of early access to renovate it , the guy was a horter I took 14 truck loads of rubbish out of the place
My concern is what rights do the banks have to foreclose on him ?
If he has another contract of sale

I was advised to get a caveat lodged in the property to protect myself more I have asked for this to get done
And if he really is in trouble with banks would they forclose and continue with the contract with me ? Or would they offer to pay my deposit back and sell via agent

Many scenarios running through my head

 

I think the bank can take it. I have no actual clue but I would imagine they have first dibs on it. Can u settle early? I’d try settling early

 

I would think the bank will already have a caveat over the property. So until they release it and contract is actually settled, technically they own it.

That said. I’m not an expert. No advice.

 

You cant settle unless the bank releases the mortgage. The bank has every right to foreclose on him. Your contract is with the seller. Banks dont want the house. They want money. You hope your buy price is enough to keep the bank happy.

 

Banks as first mortgagee would have priority. They could take possession of the property and sell it - perhaps to you. Your interest is an unregistered equitiable interest so but a caveat is only notice that you have an interest in the property and not a form of security. You might take some priority over the proceeds after the bank, but before other creditors.

 

@the world is your oyster Yeah who the hell told you to get a caveat out to "beat" out the bank??? Almost comical advice.

 

In addition to the anove, and Terry's post is as always accurate, registering your interest will at least inform the bank of the impending sale and may actually assist in this case.

In some instances when people are under pressure from a lender they go silent or missing and that can escalate the situation. Obviously I don't know the situation here but ultimately should your purchase price be sufficient to pay off the bank, or close to it, they would be much more inclined to want that sale to occur than to go through the process of defaulting the seller, repossessing the property and then selling it, which will not only take a fair while but will cost them money and come with the uncertainty of whether or not that eventual sale will cover the debt owed

 

Your deposit will be safe btw, assuming it's not been released to the seller and is being held in trust,but you'd obviously not see any financial benefit from or refund of what you've spent renovating the place

 

Who the hell agrees to 9 months settlement?

 

Would it be possible to release part of the deposit early to the vendor's bank in order to satisfy their interest in keeping the mortgage out of default?

 

And lose it? I would be very careful about doing this as you don't know what is going on exactly with the vendor.

 

Fair point, I meant a partial amount via lawyers with something in writing from the bank to agree, have no idea if that is something they would consider or is done.

We don't know the OP's position either. e.g. maybe it would be worth risking a release of $5k if $25k has already been spent on starting renovations, etc.

 

I

m trying to
Iam selling my ppor atm to release funds to settle

 

For a idea of the vendors situation
He is a bit mental sick
And has collected rubbish in the house to the extent of 14 truck loads of rubbish it took me to get the rubbish out on my expense
The house was sold private and he really would have struggled to sell it via a agent in the condition the smell and amount of junk around was unbelievable
Hence is why I pushed for a longer settlement to get the house cleaned and Reno it as there was no way could I get a bank valueation done in the state it was in

 

You are taking a risk as if it doesn't settle you would have wasted a lot of time and money.

If he is mentally sick the contract may be invalid anyway

 

Are u sure he just hasn’t changed his mind? I considered doing the same thing as you with a one of my IPs hoarder neighbours, (long settlement/cleanup etc) but I always feared that I would spend time and money cleaning up only to have him pull out becuase of his hoarding condition he may not be able to part with the house and he may change his mind. Is the mental condition just the hoarding or more to it? I wouldn’t release any deposit. Is it possible to sit down with him and his conveyancer in your conveyancers office to try to find out what exactly is going on?

 

The bank likely has the right to take possession of the property and sell it. This will leave you with a claim against the seller for breach of contract which may, if a bank is taking action, is likely worthless.

If you have made renovations to the property, you may have a claim against some of the sale proceeds, however this would likely cost more in legal fees to recover than it would be worth.

A caveat won't take priority over a prior registered mortgage, however it will let the bank know there is a buyer which means they may choose to speak with you before taking action and possibly decide it's better to wait for your contract to settle.

 

You are spending money on a property you don’t own?
Marg

 

^ ^ +1