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  1. #1

    Default 6 months and no settlement!

    Hi all - a bit of advice would be appreciated here. I agreed with my parents to purchase their property, so that they could free up some equity, continue to live there, and be able to pass it down to their grandchildren one day.

    I thought this would be a simple transaction but not so! Six months later and still no settlement...

    Here's what we are attempting to do for a property with ratings valuation of $800K:
    I buy a half share for $300K - parents now mortgage free
    Parents gift remaining half to my family trust
    Parents remain in house (nothing changes here)

    Beforehand my parents and I had discussed it reasonably well, they knew what the transaction meant, and I warned them that their lawyer would try to talk them out of it, which he did - but they were fully informed and still wanted to go ahead with the sale.

    ANYWAY... Six months down the track and still no settlement! I've had one mortgage preapproval fall over, had to apply for finance again and now the bank is slowing things down even more because each of our lawyers keep trying to change little details every other week and they're understandably getting pissed off.

    I considered changing lawyers a while ago but was afraid of the costs I would incur - well the increases in the mortgage interest rates alone since March mean that I've already lost God knows how much anyway... I thought we had finally nailed it last week (a signed S and P off to the bank to enable release of bank documents) but now the Bank has come back questioning a clause that my parents lawyer inserted which states they can live in the property rent free until death (obviously that clause never addressed what might happen in the event of a mortgagee sale grrrr).

    I suspect that my lawyer is simply disorganised and that my parent's lawyer is deliberately being difficult because he doesn't agree with the purchase - but six months?? Any suggestions here? I have no idea what the legal fees are going to be for both of us, and I'm not looking forward to finding out.

    Thanks in advance.

  2. #2
    Join Date
    Aug 2009
    Location
    Auckland
    Posts
    1,080

    Default

    This is the number one reason why I avoid any money related transactions with family members.

    Anyway, what were the conditions/clauses (apart from the one related to parents living in rent free) in the signed S&P?

    On a side note, are you sure it is a wise investment to spend $300k on a share on a property where you would not be able to obtain any rent out of it? I don't see how this could be a wise investment. Maybe I am missing something here?

  3. #3

    Default

    My benefits are both financial and sentimental - being able to use the equity to purchase other properties, and being able to keep the house in the family. There have been no issues between family - simply issues with getting the transaction completed.

  4. #4

    Default

    Quote Originally Posted by FlyingKiwi View Post
    - being able to use the equity to purchase other properties, and being able to keep the house in the family.
    (obviously that clause never addressed what might happen in the event of a mortgagee sale grrrr).
    What will happen ?

  5. #5

    Default

    The Bank wins? But that's how it always goes I presume.

  6. #6
    Join Date
    Jun 2013
    Posts
    1,980

    Default

    Not if there's a clause that says your folks live there forever, which is why, I guess, the bank is querying the clause.

  7. #7

    Default

    Yes correct Leftette - sorry I thought that Speights Boy was asking me a deep and meaningful question... Bank not interested in a property deal with "baggage".

    I should be more specific sorry when I asked for advice - is 6 months a reasonable time frame for a transaction of this nature and is it too late to do anything about it now (i.e. guts it out with same lawyers and smile when legal bill arrives).

  8. #8

    Default

    Yeah, no "deep and meaningful" from me.....it was around your parents losing their home if your business goes belly up.
    I can see why your parent's lawyer is concerned.

  9. #9

    Default

    Thank you for your concern Speights Boy, my parents have had independent legal advice and a lifetime of dealings with me and my "business" and they still wish to proceed with the sale. Any useful advice appreciated.

  10. #10
    Join Date
    Jun 2013
    Posts
    1,980

    Default

    Yeah, you're useless, SB.

    I have to agree with him though, FK. Their lawyer is doing his job, so perhaps your parents aren't being forceful enough with him if that's what they truly want to do. Sorry that's not the answer you were hoping for. I have no idea how long these relatively complicated arrangements usually take, but I can't imagine it would be 6 months if the parents instructed the lawyer correctly and you got your finance sorted.


 

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