Buyers guide to mortgagee sales

Adding to your portfolio by purchasing at mortgagee sale can be a worthwhile option. However there are some significant differences about buying a property at mortgagee sale compared to a regular sale.

What is a mortgagee sale?

A mortgagee sale happens when, as a result of the mortgagor not meeting their obligations under the terms of the mortgage, usually in not meeting their mortgage repayments, the mortgagee exercises its power of sale. The property is sold, after completing a legal process, to recover its debt.

How is a mortgagee sale different?

Notable Differences

  • Mortgagee properties are sold "as is where is" without the usual client guarantees 
  • Chattels are excluded 
  • Vacant possession not guaranteed 
  • Existing leases or income are not guaranteed 
  • Mortgagee’s have the right to cancel the contract without penalty if caveats/charging orders etc prevent the registration of the transfer of ownership 
  • The Mortgagor maintains the right to sell the property.

Considering a mortgagee sale?

If you are considering purchasing by mortgagee sale you may wish to discuss it with your solicitor prior to submitting an offer or bid.