The settlement of a mortgagee sale often differs considerably from a regular settlement. Here’s what you need to know about the settlement of mortgagee sales.

First, mortgagee sales usually have unique conditions.

A contract for a mortgagee sale will usually come with conditions that may be quite different to those of a regular settlement, as mortgagees (ie. banks and non-bank lenders) have a lawyer write up special annexures for mortgagee sales.

In my experience, these annexures usually state something to the effect of:

In a regular sale, the buyer would usually be able charge penalty interest as a form of compensation for the inconvenience and costs associated with a delayed settlement. But when a buyer agrees to a mortgagee sale with the condition outlined above, the buyer forfeits that right.

Second, it’s my experience that mortgagee sales are often delayed past settlement date.

Mortgagee sales seem to have a tendency to become overdue from the seller’s side. This may be because the documents involved need to be signed by staff, who may be busy and/or located in a different time zone.

If the sale included a condition that the buyer cannot charge penalty interest, then the buyer won’t be able to gain any compensation for that delay.

If you’re a real estate agent, you can help buyers in a mortgagee sale by ensuring they know about the unusual conditions included, and how those conditions could impact settlement of the property.

Image by Cathy via Flickr.

About the Author

Residential Settlements

We provide real estate settlement services throughout Western Australia. In addition, we complete Related Party Transfers, Family Transfers, Private Sales and other title related services.