Hi
My question is what happens if I have a registered 2nd mortgage/ caveat on a property but the person who has a 1st mortgage with the bank
goes into default. Will I still receive the monies I am owed once the bank sells the property and recoups their money?
Does the bank contact the person who has the 2nd mortgage/caveat or do they just wipe it?
If the bank wipes it clear do I have grounds to recoup the money from the person who goes into default?
Assistance much appreciated
Jay
2nd mortgage basically means second in line secured creditor. If there was insufficient to cover the first mortgage (after expenses) then the 2nd mortgage cops the loss and so on down the line.
First to take losses are the unsecured creditor
Nest are the secured in order
Next are the agents liquidating ( legal, RE etc) If these guys take a loss it's a total loss.
rulership wrote:If the bank wipes it clear do I have grounds to recoup the money from the person who goes into default?
There isn't much point trying to sue someone that has no money, so it's most likely you will have to cop the loss on the chin.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:rulership wrote:If the bank wipes it clear do I have grounds to recoup the money from the person who goes into default?
There isn't much point trying to sue someone that has no money, so it's most likely you will have to cop the loss on the chin.
Depends. They may have other assets. Unless the loan is non recourse (commercial?) you can still pursue a judgment even if they're bankrupted you can lodge a claim. The mortgage is a security over the property so once that is disposed of you become an unsecured creditor for any remaining assets. Getting a judgment might help bump you up the queue but you would need to get specific legal advice depending on the situation.
Almost right guys the Crown has ultimate rights to recoup Land tax etc and then the Local Council for Rates and then the registered mortgagees starting at number 1 and moving downwards in the pecking order.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Almost right guys the Crown has ultimate rightsI forgot about those parasites.
And a caveat is not a mortgage and offers no security. A caveat is just a notice that someone has an interest in this property and it prevents further dealings such as mortgaging or transferring title.
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
You should have check first if the property is about to get default before getting a 2nd mortgage in order to avoid situations like this.
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