02 Nov Purchasing a property at a mortgagee sale? Tips and Traps.
In previous articles and legal tips we have covered the differences in purchasing a property at auction as apposed to negotiating for a property using the Standard Sale and Purchase Agreement through a real estate agent. Mortgagee auctions differ again in that these types of auctions usually result from the existing owner having defaulted on their property / mortgage loan repayment.
Purchasing a property at a mortagee sale carries additional risks for the purchaser:
- There is not cover for damage to the property prior to settlement i.e. post auction and prior to settlement.
- Chattels can be removed prior to settlement as the bank usually only has security over the property and not the dishwasher, curtains, light fittings, floor coverings, alarm etc.
- Vacant possession on settlement may not be achieved and it would be at the purchasers cost to evict the current tenant or property owner.
- Access to the property may be difficult and often this may mean that you may not be able to undertake the usual due diligence such as building inspection etc.
- There are no Vendor warranties such as Code of Compliance Certificates.
As a potential purchaser of a mortgagee property at a mortgagee sale, you should do your homework on the property before the auction or submitting an offer. Your solicitor / property lawyer should always review the legal documents and you should clarify your level of risk, should you proceed with the purchase.
For more information please contact the property law team at Quay Law Barrister and Solicitors in Auckland.
Our law firm offers fixed price conveyancing on standard residential transactions.