Buying at Receivers Auction with multiple mortgages and caveats

We are looking at buying a QLD property at receivers auction that has two mortgages and one caveat placed on the property.

1. Generally speaking, will these be released/removed and will we get clear title to the property?
2. Is it possible that not all mortgages will be released and the caveat will not removed at settlement?

The contract has a special condition that if the Bank replaces the contract before settlement date, with the Bank as seller in its capacity as mortgagee exercising its power of sale (instead of the owner/receiver as the seller in the existing contract), then "the Bank is not obligated at Settlement Date to provide the Buyer with releases of any mortgagor or other security over the Property (other than that for any mortgage or security that has priority over the Mortgage)".

Does this sound right? Can they do this? Does this mean you would inherit Mortgage #2 and the caveat?

Desperately need some insight!

Thanks so much!
 
We are looking at buying a QLD property at receivers auction that has two mortgages and one caveat placed on the property. 1. Generally speaking, will these be released/removed and will we get clear title to the property?
Removed before settlement - yes. So that you or your own incoming mortgagee (if you are getting a loan) will get clear title. No lender that you are getting a mortgage from would accept any less.

2. Is it possible that not all mortgages will be released and the caveat will not removed at settlement?
No. No solicitor in his right mind, acting for you as purchaser, would accept that scenario.

The contract has a special condition that if the Bank replaces the contract before settlement date, with the Bank as seller in its capacity as mortgagee exercising its power of sale (instead of the owner/receiver as the seller in the existing contract), then "the Bank is not obligated at Settlement Date to provide the Buyer with releases of any mortgagor or other security over the Property (other than that for any mortgage or security that has priority over the Mortgage)". Does this sound right?
No, it does not sound right. But it does sound like bank techno-babble.:rolleyes:

Can they do this?
They can write anything they like in the contract (as they have), but settlement will not happen if you cannot get clear title.

Does this mean you would inherit Mortgage #2 and the caveat?
No.

You need a good property solicitor/lawyer not a conveyancer, I would strongly suggest in this case.;)
 
We are looking at buying a QLD property at receivers auction that has two mortgages and one caveat placed on the property.

1. Generally speaking, will these be released/removed and will we get clear title to the property?
2. Is it possible that not all mortgages will be released and the caveat will not removed at settlement?

The contract has a special condition that if the Bank replaces the contract before settlement date, with the Bank as seller in its capacity as mortgagee exercising its power of sale (instead of the owner/receiver as the seller in the existing contract), then "the Bank is not obligated at Settlement Date to provide the Buyer with releases of any mortgagor or other security over the Property (other than that for any mortgage or security that has priority over the Mortgage)".

Does this sound right? Can they do this? Does this mean you would inherit Mortgage #2 and the caveat?

Desperately need some insight!

Thanks so much!
From my small experience one would hope that the property has a clear Title on the settlement day,I have only ever bought 2 properties that had Caveats over the properties,and both times the vendors were in Jail and the Caveats were put in place by the AT0,one Bank,both those settlements fell over several times,one by one they were all lifted even the Gentleman that was in Jail put one the property prior too settlement but in the end when the ink was dry,both of those took over 3 months to settle,as Propertunity has already said pay the money to a Legal person who deals in this everyday..good luck.."imho"
 
The contract has a special condition that if the Bank replaces the contract before settlement date, with the Bank as seller in its capacity as mortgagee exercising its power of sale (instead of the owner/receiver as the seller in the existing contract), then "the Bank is not obligated at Settlement Date to provide the Buyer with releases of any mortgagor or other security over the Property (other than that for any mortgage or security that has priority over the Mortgage)".

Does this sound right? Can they do this? Does this mean you would inherit Mortgage #2 and the caveat?

A lot of this comes down to priority. If the first mortgagee is the one exercising power of sale, then they won't need to provide releases.. nor will they need to remove the caveat (assuming the caveat was lodged after the first mortgage). Section 79, of the Land Title Act 1994 (QLD) states you would be free from liability from the first mortgage, and following mortgages.

The Land Title Practice Manual at part [11-0240] goes on to discuss points where a caveat may be overridden, in this case, a mortgagee exercising power of sale. (provided the claim in the caveat is for money.. and not established prior to the Mortgage)

Might want to check with the Titles Office though.. I'm not a legal professional.

Hope your settlement goes smoothly.
 
Sought advice from Property Lawyer!

Hi everyone and thanks to those who responded! I sought advice from a Property Lawyer and thought I'd post his advice for learning.

Basically in a nutshell:

The original contract specified the receiver, as the seller. For the second mortgage to be released and the caveat to be removed, requires the cooperation of these parties to action.

However, if this fails, the bank can then step in and replace the receiver as seller. The bank does this as a mortgagee exercising their power of sale. In such case, the cooperation of the second mortgage and caveator is not required. They don't need to provide releases or have caveats removed. It "just happens" and it comes with their powers of sale.

It does depend on type of caveats and second mortgage in place, but basically The Helix was right!

Hope this helps anyone else in a similar situation.

Cheers!
 
Thanks for the update- it adds to the wealth of knowledge on this forum.

I agree with the legal advice you have received for what it is worth.
 
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