The period between finance and settlement isn’t the time to make changes to the directorship of a company buying a property.
That’s the lesson a director learned the hard way recently.
Having purchased a property in the name of his company – of which he was sole director – he signed the Transfer of Land as the sole director.
But then, for reasons known only to himself, he resigned as director and his partner was appointed in his place.
The mortgage documents were then signed by the new director.
Although they were within their rights to change directorship the bank needed to be satisfied that the directorship at settlement was correct.
At settlement banks always check that the signatures on the Transfer of Land match those on their mortgage document. In this case the signatures didn’t match and the settlement was called off.
To allay their concerns the bank performed a company search to ensure the partner was noted as a company director. Having found that everything was in order the bank agreed to settle but not only after the settlement was delayed.
While we always check company directorships, agents can help avoid costly delays by encouraging clients to advise the agent, the bank and the settlement agent if they make any changes to the entity purchasing the property.
Image by Michael Chen via Flickr.