Can anyone advise what my exposure is if I purchase a property in Victoria on a 12 months settlement and the vendor ceases to keep up with payments on their mortgage ?
Can the lender force the sale of the property even though I have entered into a contract to buy ?
What if the vendor files for bankruptcy… once again am I screwed or is my interest in the property protected ?
Does it make a difference if I enter into an option to purchase as opposed to a contract to buy ?
Thanks
That is a very interesting question.
I don't really know, but I suspect the 1st mortgage holder would have stronger rights than the new owner.
WIth Bankruptcy, the Bankruptcy trustee can claw back sales of assets up to 5 years after they occur, if they are done to defeat creditors. SO I guess it is possible, and would depend on the circumstances.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
HI there
I think this would be one of the times you really would want to put a caveat on the property noting your interest and putting the mortgagee on notice that there is a bona fide purchaser for value that has an interest in the property.I would think it would just tend to bring any settlement forward as the mortgagee would need to deal with the new purchaser who would have a prior interest to any potential purchaser of the property. You would be in a stronger position if there was an existing contract not just an option to purchase.
As Terry has highlighted the knowledge of the parties at the time – and whether the contract is intended to defeat creditors is a factor – whether any clawback occurs.
If there are any concerns – why not have a clause that you can accelerate settlement and bring it forward if there were any problems with the vendor not paying his mortgage commitments.
thanks
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