How do banks deal with Probate delays?


I bought a property. All things on my side of the fence have been sorted and conditions met. Offers signed and accepted, finance approved, ready to settle... but turns out probate has been delayed due to a screw up on the vendors part. We have reached an agreement to take possession prior to settlement and pay a pittance of a rent until probate is granted ($50 a week). We are told it will take around 3 months to get sorted.

My question is: Leaving out the fact they shouldnt have put the house up prior to formal grant of probate, how long would the bank be willing to delay settlement? Is there a shelf life for the final approval or is it that once the docs are all signed and approved, they can't back out?

Thanks guys!

Buy the sounds of what you write you loan is not a pre-approal its a formal approval, you have signed doc's and sent them back to the lender.

I don't believe that they would pull the plug, if it was a pre-approval then it would be a different story.

I am sure the other brokers will have something to add or have more info.

It is a Formal approval. My main concern is that the bank will pull the plug if probate takes too long to eventuate. Could this happen?
Do you believe that any of the conditions of the loan offer will change? For example change of employment and stated income?

If all conditions stay the same or improve I don't see an issue, apart from delayed settlement.

Have the bank advised how long probate will take? This has got me thinking (I am not an expert of Probate) how did they sell the property? Have contracts been exchanged?
Contracts have been exchanged. New clause has been added "Subject to probate by end of June"

The vendor jumped the gun is why. Now, someone on the will screwed up the probate paperwork and it had to be all redone. We have been advised by the lawyer in charge of Probate that it will take around 3 months.
My understanding is that the loan will just sit in pending until settlement and then the loan will draw down.

The lender wont/can't draw down the loan until the title is handed over and the mortgage is registered over it via the land titles office.

Apart from it being an inconvenience I don't believe you will have an issue.

Who is the lender btw?

It's not much of an inconvenience as we will be living int he property until settlement for a small-change amount of Rent (we can save some money up while waiting). It's just an element of risk I would like to fully understand. I don't want settlement to come around whenever it is able to and the bank wants me to re-apply for finance.

Thanks for the advice Evachange. Much appreciated! :D

We have a similar one in our client base at the moment.

Great purchase price, slow to settle though.

Issue with ours is that its an LMI deal via CBA................u get 6 mths to settle after the issue of the loan docs, beond which new app is required.

Generally not an issue if the clients can still do the deal, in our case the borrower spends much of his time slaving in the bush offshore, and cant just willy nilly do new docs :(

new Question:

My loan application expires on the 9th and the sale contract expires tomorrow. And since the buyer is in breach as probate has not been officially granted by the end date stipulated in the contract, I have the freedom to re-negotiate or vacate.

I believe I am now in a very unique and advantageous situation.
1) The FHB property market here has "apparently" cooled off.
2) Will claimants do not want this property to be held costing them any more than it is. So they will not want to put the house back up for sale and wait for a potentially lower offer than ours, while having the place sitting empty eroding the estate inheritance moneys.
3) We may not be able to get our loan application extended on a property that may have declined in principle value.

so arguing that, does that open up the door to us re-negotiating at a lower price on the basis of being able to settle quick, and avoiding a MASSIVE inconvenience to the estate claimants?

It's bloody tempting.
finance expiring happens quite a bit. I am involved in many deals where land is sold with the settlement date being 14 days after subdivision registered. Loan docs expires all the time, most within 3-6 months of docs issued, depending on the lender.

Just because you previously had a loan approved, and signed docs does not hold the lender to re approving your loan, and I have seen many deals fall over after 'formal approval'. be very wary of letting them extend settlement indefinately, without some type of clause that protects you, if the valuation changes, or the lenders policy changes, or you change and you cant get the same loan later.
I am protected. Buyer is in breach of contract if probate is not officially granted and settlement doesnt occur prior to June 30. Then I have power to re-negotiate or just vacate and get my deposit back. My application for loan extension apparently should go straight through according to my broker but I am aware it may not. It's been factored in.