What to do when your property settlement is at risk of falling apart?8-July-2021 Commercial Disputes Property By Jamal Bakalian
It is a truth universally acknowledged that buying and selling property is one of the life’s most stressful transactions. Everyone’s goal is to finalise the transaction with as little difficulty as possible – but what do you do when things go wrong?
Senior Solicitor Jamal Bakalian talks us through 5 key warning signs that your conveyance is not progressing as it should, and what measures your Solicitor can put in place to bring those issues to a crashing halt and secure your property.
Read on to find out more.
Your mortgagee is not able to discharge the mortgage on time
- This is one of those issues that can be best avoided if the Bank is provided with the documents they need in the correct timeframe.
- As you know, in order for a title to pass to the purchaser when selling a property, your mortgage must be discharged and the Certificate of Title handed over, clear, to the purchaser once your mortgage has been paid out in full.
- The discharge of mortgage process can be lengthy however with the use of PEXA (online conveyancing) your Solicitor will often invite the Bank as one of the first parties to participate in the settlement so that communication is clear from the very start.
- It is important that your Solicitor continually follow up the Bank throughout the settlement process to ensure that they have all the documents they need to discharge the mortgage otherwise settlement could be delayed, and you may be required to pay the Purchaser a fee for every day of delay.
If you are purchasing a property but your finance is not approved on time
- The best way to avoid this issue is to ensure that you have adequate pre-approval prior to signing a Contract and entering the settlement period.
- However, if this is not possible, what you can try to do is enter into the Contract of Sale on the condition that the sale is subject to finance by a specified date. This may not be accepted by the Vendor, but it is worth a try if you have been assured by the Bank that finance is impending.
- Otherwise, if you have entered into a Contract for Sale but your Bank approval has not come through you will need to decide whether to terminate the Contract altogether or continue with it and try to obtain alternate finance.
- There will be a penalty for breaking the Contract and you will have to forgo your initial deposit. This is why it is always advisable to ensure that your finance is organised prior to entering into a Contract.
- If you prefer to continue with the sale, your capable Solicitor can attempt to obtain an extension of the settlement date to allow you more time. Your Solicitor will need to negotiate on your behalf and it will be up to the discretion of the Vendor to accept.
The purchaser refuses to settle following their final inspection of the property
- The best way to deal with this issue is to try to prevent it from happening in the first place.
- One way to do this is to ensure that you have disclosed all defects / flaws with the property up front.
- The second way is to ensure that your capable Solicitor has included a clause in the special conditions of the Contract whereby the Purchaser is required to acknowledge that upon exchange they accept the condition of the property as is and that the condition of the property cannot be used as a reason to delay or avoid settlement.
Are the correct full legal names on the front page of the contract you are entering into?
- This may seem like a trivial point, however, you need to ensure that when you or your agent complete the front page of the Contract that:
- All names of all purchasers are included;
- The spelling of all names is correct; and,
- The full legal names of all purchasers are being used.
- It will be very difficult for example to add a purchaser during the settlement period once the Contracts have already been signed, especially if the cooling off period has already expired.
- If you need to add a purchaser to the front page of the Contract this must be handled very delicately lest it may trigger you being liable to pay transfer duty.
- The Vendor does not have to agree to change the front page of the Contract. If they do not agree to add a purchaser there is no way to force them and it will be a case whereby you may need to forfeit your deposit if you no longer wish to go ahead with the sale.
- This is particularly so if the Vendor is selling their property in a rising market and already have other buyers lined up.
- However, if the Vendor is content with the sale going through, they may be agreeable to make the change to the Contract, but they may require you to pay the legal costs of fixing up this issue.
- Generally, what needs to occur is that your trusted Solicitor will prepare a Deed of Rescission to rescind / cancel the existing Contract and enter into a new Contract with the correct entities. This is to avoid you paying double transfer duty so that you only have one transaction not two.
A caveat is lodged against the property that you are selling
- As you know, when you are preparing to sell your property, your Solicitor will run a title search as part of compiling the Contract for Sale. The Title Search will reveal whether or not there are any encumbrances on your title. Hopefully at that stage you would be aware of any encumbrances including a caveat that may have been lodged against your property as part of an outstanding debt or other issue.
- However, if you have already exchanged Contracts and during this time a caveat is lodged against the title of your property, you will need to act fast.
- You will need to consult your trusted commercial litigation Solicitor and that’s why it is so helpful to entrust the sale of your property with your commercial litigation Solicitor from the very start so that issues such as this can be dealt with expertly.
- If there is enough time before the settlement, your Solicitor will need to lodge a lapsing notice which allows the caveator only 21 days to obtain an order from the Supreme Court of NSW extending their caveat. If they fail to obtain such an order, the caveat will lapse, and your title will be clear again.
- However, if the settlement is in less than 21 days, your Solicitor will need to file an urgent application in the Supreme Court of NSW to remove the caveat and under those circumstances the Court will set an urgent Hearing date usually on the same day or the next day.
- To avoid this sort of panic, it is best to ensure that your Solicitor is refreshing your title search regularly so that any encumbrances not previously on title, will be revealed with enough time to rectify them. Please keep in mind that mercifully, this situation is a rarity!
At Streeterlaw, our conveyancing team consists of highly experienced Commercial Solicitors who are well-equipped to guide you through the inevitable twists and turns of your conveyance.
It is advisable to undertake your conveyance with a capable commercial Solicitor who can not only handle things if they go wrong but can also prevent foreseeable issues from occurring in the first place! For peace of mind, call Streeterlaw on 02 8197 0105 to talk to one of our Senior Commercial Law Solicitors today.
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