Mortgagee sales - need law change?

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#2539454 12-Aug-2020 15:01

No we don’t need a law change. As far as I am aware is no impediment to you adding any conditions you want to your offer, nor the seller doing the same. Neither party has to accept the offer based on the conditions, and if you don’t like the vendors conditions, don’t proceed.

MikeAqua

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#2539464 12-Aug-2020 15:15

tchart:

kingdragonfly: Meanwhile the occupants could tear out all the copper piping / wires, and take a sledgehammer to the house

I believe this happened a lot in the US when the GFC hit. Literally stipped everything out of the house - even the kitchen sink.

There is film called 99 Homes that depicts this. Great film.

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kingdragonfly

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#2539465 12-Aug-2020 15:15

My point of raising this is there should be a minimum amount of protection for the buyer.

I wouldn't by a bicycle without a clear title. Why should mortagee be allowed to?

The bank, building society, or savings and loan association have a team of lawyers and professionals.

They've made money off the mortgage.

They've likely lobbied to keep their responsibilities light.

To me it seems like pure greed and laziness to pass on all responsibilities when things go awry.

Seems unfair.

neb

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#2539470 12-Aug-2020 15:22

elpenguino:
Sounds like you dodged a bullet there.

From the OP's description I'd say more like "walked in the other direction from a dumpster fire".

MikeAqua

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#2539471 12-Aug-2020 15:27

In a relationship property situation, you can apply for a vacant possession order (I may not have the terminology correct). For example if your ex is living in the property, they are obstructing a sale process and that sales process is subject to a court order.

I'm guessing analogous recourse is available to mortgagees. They may not choose to go there if they can duck-shove that cost, risk and bad PR onto the purchaser.

Mike

BlinkyBill

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#2539481 12-Aug-2020 15:43

kingdragonfly: My point of raising this is there should be a minimum amount of protection for the buyer.

I wouldn't by a bicycle without a clear title. Why should mortagee be allowed to?

The bank, building society, or savings and loan association have a team of lawyers and professionals.

They've made money off the mortgage.

They've likely lobbied to keep their responsibilities light.

To me it seems like pure greed and laziness to pass on all responsibilities when things go awry.

Seems unfair.

you don’t have to buy without a clear title, simply make that a condition of purchase. You can include whatever conditions you like - the vendor can sell on whatever basis they want. If you don’t like the conditions, don’t make an offer.

it’s not unfair, it’s the conditions the vendor wants to pursue. Who are you to set conditions the vendor doesn’t want, and expect them to agree?

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mattwnz

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#2539484 12-Aug-2020 15:48

BlinkyBill:

No we don’t need a law change. As far as I am aware is no impediment to you adding any conditions you want to your offer, nor the seller doing the same. Neither party has to accept the offer based on the conditions, and if you don’t like the vendors conditions, don’t proceed.

As the buyers lawyer should be advising the buyer of the purchase anyway in this type of situation, I would have thought they would put in suitable clauses to protect the buyer. But if buying at an auction for example, I am guessing that could be difficult to do.

BlinkyBill

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#2539508 12-Aug-2020 16:10

mattwnz:

BlinkyBill:

No we don’t need a law change. As far as I am aware is no impediment to you adding any conditions you want to your offer, nor the seller doing the same. Neither party has to accept the offer based on the conditions, and if you don’t like the vendors conditions, don’t proceed.

As the buyers lawyer should be advising the buyer of the purchase anyway in this type of situation, I would have thought they would put in suitable clauses to protect the buyer. But if buying at an auction for example, I am guessing that could be difficult to do.

No, it’s not difficult to do when buying at auction.

eracode

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#2539831 13-Aug-2020 04:40

@wellygary Quote: “Chattels are not included in mortgagee sales, so the previous owned is within their rights to take, lights, switches, taps , basins, etc... ”

Chattels may not be included in mortgage sales but what you’re saying is totally incorrect - all the things you mentioned are not chattels - they’re fixtures and fixtures always remain in the sale unless the vendor specifically states otherwise in the sale offer. The vendor has no ‘right’ to remove those things from the property without the prior knowledge of the purchaser.

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lxsw20

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#2539833 13-Aug-2020 06:36

Maybe the insurance definition is different but contents can include carpets, hanging light fixtures and curtains for example. So possibly they could remove those things.

eracode

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#2539836 13-Aug-2020 07:22

lxsw20:

Maybe the insurance definition is different but contents can include carpets, hanging light fixtures and curtains for example. So possibly they could remove those things.

That’s right but what I’m saying is that the vendor can’t simply remove fixtures under any ‘right’ without the prior knowledge of the purchaser - eg. by specifying them in the Agreement for Sale and Purchase as not being included in the sale.

The case law around fixtures and chattels is huge and very well defined. A vendor can’t just rip out switches, taps, basins, etc as asserted by wellygary. Those things are not chattels.

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#2539941 13-Aug-2020 09:45

eracode:

Chattels may not be included in mortgage sales but what you’re saying is totally incorrect - all the things you mentioned are not chattels - they’re fixtures and fixtures always remain in the sale unless the vendor specifically states otherwise in the sale offer. The vendor has no ‘right’ to remove those things from the property without the prior knowledge of the purchaser.

Maybe he's mentioning it in the context of the previous comment about the US.

tchart:.. believe this happened a lot in the US when the GFC hit. Literally stipped everything out of the house - even the kitchen sink.

wellygary:..Chattels are not included in mortgagee sales, so the previous owned is within their rights to take, lights, switches, taps , basins, etc...

There, and in Canada, depending on the State/Province, 'fixtures' - unless specified in the Sale Agreement, and sometimes even then - are not necessarily included.

Many of those foreclosed US McMansions sold for virtually nothing, with the seller (eg. bank) not warrantying title to any fixtures and/or other property conveyed with the sale.

The essence of the property - the wood, nails, brick, concrete and other materials of construction would likely be part of the real estate, but things fastened in such a way that they could be 'readily removed', without compromising the structure of the building, might not be.

'Hard fixtures' such as heating/cooling systems, such things as carpet, lights, ceiling fans, appliances, doorknobs, windows - even the kitchen sink and countertop might be repossessed by third parties.. before, after or during the sale.

Usually you'd think fixtures attached to the premises would vest in the purchaser after closing if they weren't removed prior to then.

But if the seller - or previous resident - had wrongfully prevented a person or their agent from removing such items, that vendor or financing company, or their agents, might well contact the buyer after the sale and 'ask' for the return of the fixture/s, or for the buyer to assume the financing.. to prevent them rightfully entering and removing the fixture/s.

Gotta love the US.
Buyer beware.

antonknee

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#2540109 13-Aug-2020 12:12

BlinkyBill:

kingdragonfly: My point of raising this is there should be a minimum amount of protection for the buyer.

I wouldn't by a bicycle without a clear title. Why should mortagee be allowed to?

The bank, building society, or savings and loan association have a team of lawyers and professionals.

They've made money off the mortgage.

They've likely lobbied to keep their responsibilities light.

To me it seems like pure greed and laziness to pass on all responsibilities when things go awry.

Seems unfair.

you don’t have to buy without a clear title, simply make that a condition of purchase. You can include whatever conditions you like - the vendor can sell on whatever basis they want. If you don’t like the conditions, don’t make an offer.

it’s not unfair, it’s the conditions the vendor wants to pursue. Who are you to set conditions the vendor doesn’t want, and expect them to agree?

I think his point is that just because you can sell something with those conditions doesn't mean you should. We don't let shops sell stolen bicycles with knowingly faulty brakes for example, and then just turn around and say "well that was the condition the vendor put on the sale".

Consumer protections do exist for a reason, and I suspect the point here is that (in their view, and mine also) that the minimum standards aren't currently high enough. Sometimes a totally hands-off laissez-faire, caveat emptor approach isn't what's best.

BlinkyBill

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#2540157 13-Aug-2020 12:53

antonknee:

I think his point is that just because you can sell something with those conditions doesn't mean you should. We don't let shops sell stolen bicycles with knowingly faulty brakes for example, and then just turn around and say "well that was the condition the vendor put on the sale".

Consumer protections do exist for a reason, and I suspect the point here is that (in their view, and mine also) that the minimum standards aren't currently high enough. Sometimes a totally hands-off laissez-faire, caveat emptor approach isn't what's best.

Golly! Property is not covered by consumer protection laws, including the CGA, in New Zealand. It is silly to compare the purchase of a bike with the purchase of a house. Do you engage a lawyer when purchasing a bike?

The point of consumer protection laws are to protect consumers with a baseline of legal recourse when it’s not viable to engage a lawyer to review the contract when you purchase a toaster or a bike (ignoring precedent for the purposes of this post).

Most people would buy a house a few times in a lifetime; and would benefit from engaging a lawyer when doing so (even though there is a significant proportion of incompetent property lawyers, do your due diligence on that also). There is no overarching legal protection for anyone when purchasing property - there is only legal action; so it makes sense for the purchaser and the vendor, the participants in the contract, to make sure the terms and conditions covering the sale and purchase agreement are agreeable. This cannot be defaulted, because there is no default position.

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#2540158 13-Aug-2020 12:53

I won't go into a lot of the details and so forth due to a lack of time but the structure of the law in regards to mortgagee sales (both for any intending buyer of the property and the mortgagor, i.e. borrower) is quite tilted in favour of the mortgagee. During most times and instances, this isn't that problematic as no one in their right mind should try to buy at a mortgagee sale without having taken lots of advice. As for the borrower/mortgagor, banks are generally well-incentivised to work with them and allow a voluntary sale. Anyone who plays ball will almost always achieve a better outcome than allowing the bank to take over the sales process. When the latter happens, the courts don't make very stringent demands of the mortgagee - e.g. they aren't required to hold on to the property past unusual/unfavourable times to achieve the best sale price; in assessing whether a fair sale price was obtained, the court will focus more on the process of the sale as opposed to the details of any marketing etc.

The brutal reality is that anything associated with mortgagee sales is a risky game. As a borrower, if you are a sensible and responsible person, you won't ever need to go there. As a buyer, don't get too excited about your so called bargain.

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