Settlement on Monday...but...

[emptoria]

Hi All!

Long story cut short, settlement on IP in QLD all booked for Monday.

I'm all set as the buyer. The vendor has paid off mortgage many years ago.

My solicitor contacted me a few hours ago informing me she received a 'courtesy' call from the seller's solicitor saying the vendor cannot locate the mortgage discharge documents therefore putting the settlement at risk.

Has anyone experienced this sort of issue?

This is quite an issue for me due to the following reasons.

1) I will be transferring funds incurring interest charges from tomorrow. If settlement is extended, I will be out of pocket.

2) I already had a lease agreement signed for the existing vendor to rent back for 10 weeks. It's at a reduced rent so that I can do some minor renos whilst also having it occupied over xmas break until busier Jan period.

3) I need to have the house available for tradies to start renos as early as Tuesday. With a settlement extension, this may jeopardise having improvements done by xmas.

4) Solicitor says she'd sue........but the vendor is a nice old lady.......and I also need to do the renos during rent back.

Thanks all!

 

[Marty McDonald]

Very common unfortunately. Get your solicitor on to it that's all you can do. I would say happens 25% of the time in the situation where the loan was paid out years ago. You see the lender gives the title back along with the mortgage discharge papers for the owner to send to land titles office which most people never do as they think...I have the title the mortgage must be finished. When it comes time to sell this comes up. It shouldn't though as the vendors and for that matter the buyers solicitor should have checked this!

 

[emptoria]

Hey Marty,

From memory, in Victoria, the Section 32 contract states existing loans which implies due diligence is conducted beforehand?

In QLD, this is not required? I asked my solicitor what she'd do and she said she'd sue if it was her. But as I mentioned in new point 4) above, the vendor is a lovely old lady.

 

[Aaron_C]

When your solicitor says 'sue' - what they mean is sue for specific performance (i.e. make the vendor settle the property as agreed). They don't mean sue for damages.

 

[Marty McDonald]

Hey,

Yeah not sure each state and territory is slightly different. Title search would be the common way in all states to identify the mortgage which hasn't been discharged though.

What about asking for an adjustement to cover your out of pockets?

 

[emptoria]

When your solicitor says 'sue' - what they mean is sue for specific performance (i.e. make the vendor settle the property as agreed). They don't mean sue for damages.

Not sure how they will settle as agreed apart from agreeing to agreeing to extend settlement?

Hey,

Yeah not sure each state and territory is slightly different. Title search would be the common way in all states to identify the mortgage which hasn't been discharged though.

What about asking for an adjustement to cover your out of pockets?

Yeah, it's something that is being considered:

1) Reduce settlement amount by agreed rent back per week x {weeks to be extended}

2) Agree on work to be commenced from original date as per lease

3) Agree to refund money spent on works completed plus penalties in the very unlikely event it fully falls through

 

[Rolf Latham]

Sue ?

Negotiate usually has much better results

Can the seller get out of the property on current settlement so u can get in there with tennant on licence to occupy ?
ta
rolf

 

[Terryw]

Sue ?

Negotiate usually has much better results

Can the seller get out of the property on current settlement so u can get in there with tennant on licence to occupy ?
ta
rolf

This is possibly the best solution.

 

[JDM]

When your solicitor says 'sue' - what they mean is sue for specific performance (i.e. make the vendor settle the property as agreed). They don't mean sue for damages.

An order for specific performance is not going to change anything. The seller is either able to release the mortgage in time or they're not.

A mortgagor has a legal right to redeem the mortgage once the debt has been paid (Noakes & Co Ltd v Rice) and as such the seller has a right to have the mortgage released.

You can't settle with until the mortgage is released as that will mean your interest in the property will be subject to the mortgage (s 185 Land Title Act 1994).

If the seller can not settle, you will have a right to terminate under clause 9.1 of the REIQ contract(if used), in addition to a right to terminate at common law. If you chose to terminate you will have remedies available to you under clause 9.5 (including refund of the deposit and loss of bargain damages).

 

[Scott No Mates]

Generally you will have to wait 14 days before the solicitor can issue a notice to complete

Would the title search not have shown up the mortgage (not having been discharged)?

 

[the helix]

the vendor cannot locate the mortgage discharge documents therefore putting the settlement at risk.

In an ideal world, vendor calls bank:

Vendor: Hi.. remember that Mortgage I paid off years ago?
Bank: Yes.. you paid it off.. we gave you a discharge form.
Vendor: Yeah, I lost it.. can I have a new one?
Bank: Sure.. ok.. you don't owe us any money anymore, it's kinda silly for us to have a mortgage over your property still.
Vendor: I know right? I'll take good care of this one.

Problem solved.

 

[subsub000]

The vendor already paid off mortgage long time ago and the mortgagee doesn't have any interest in the property as shown in the title search. Why did she have to present the mortgage discharge documents for settlement?

 

[THEGREAT888]

property title

Hi All!

Long story cut short, settlement on IP in QLD all booked for Monday.

I'm all set as the buyer. The vendor has paid off mortgage many years ago.

My solicitor contacted me a few hours ago informing me she received a 'courtesy' call from the seller's solicitor saying the vendor cannot locate the mortgage discharge documents therefore putting the settlement at risk

I thought if the vendor hold the property title it is not required to provide mortgage discharge document.

t

 

[Rolf Latham]

I thought if the vendor hold the property title it is not required to provide mortgage discharge document.

t

Hi 888

Its likley there is no money owing on the loan, but the title is still with the lender in their "safe" and the mortgage still needs to be discharged

BTW Nice Avatar of the Mittens there

ta
rolf