Can you buy house with judgement mortgage on it?

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LPK12345

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I've just put an offer on a house but have since found out that there's a judgement mortgage against the folio.

Are there any potential issues with buying a house like this? What happens if the debt against the house is greater than sale price? Will the judgement mortgage still be attached to the folio once it gets transferred to the new seller?

Does anyone know if the bank has issues with approving mortgages for houses associated with judgement mortgages?
 
I am not a lawyer...

I don't think that the current owner of the house can sell it without discharging the judgement mortgage.

So the answer is that you won't be able to buy it until the current owner's solicitor gives an undertaking to discharge the judgement mortgage.

Brendan
 
Brendan Burgess said:
I am not a lawyer...

I don't think that the current owner of the house can sell it without discharging the judgement mortgage.

So the answer is that you won't be able to buy it until the current owner's solicitor gives an undertaking to discharge the judgement mortgage.

Brendan
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That's also my understanding (albeit, I'm also not a lawyer).

I would expect that the house is advertised for sale, so the vendor knows that the sale proceeds will be net of whatever debt is due. Let's not forget, they know the judgement mortgage was granted, by the courts.

From a practical point of view, I'd see it no differently to a vendor selling a house that still has a traditional Homeloan secured on it.it just gets repaid from the sale proceeds, with the solicitors looking after it.
 
Is this an urban or rural home? Was it a previous investment property or a house that forms part of an inheritance net of the judgement? I would be cautious about buying a house that someone had been evicted from or would still hold the belief that it is theirs contrary to all legal evidence. Try to establish the history of why that house had the judgement in the first place. I would be far more comfortable with it being a poor investment for someone or a couple who moved to Australia never to return than a house that has been in a family a couple of generations in a rural town and that one of the family is unwillingly selling it.
 
Brendan Burgess said:
I am not a lawyer...

I don't think that the current owner of the house can sell it without discharging the judgement mortgage.

So the answer is that you won't be able to buy it until the current owner's solicitor gives an undertaking to discharge the judgement mortgage.

Brendan
Click to expand...
I think that you can (legally) sell a house with a mortgage on it, but the mortgage doesn't go away. That is why mortgages are registered. If the OP buys the house he is on notice that there is a mortgage on that property, unless the mortgage has been redeemed it is still owing and the liability continues to exist.

If the vendor does not pay off the mortgage the mortgage holder will not chase them for repayment. The mortgage holder still has a charge over the property so they can chase the purchaser.

For this reason you cannot in practice sell a house with a mortgage on it.
 
cremeegg said:
you cannot in practice sell a house with a mortgage on it
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Yes you can! The entire property market would grind to a halt otherwise.

Part of the legal conveyance process is to ensure any charge on the property is cleared.

I'd have no concern about judgement mortgages or anything else; except to make sure the correct steps are taken to have those cleared.
 
DannyBoyD said:
Yes you can! The entire property market would grind to a halt otherwise.

Part of the legal conveyance process is to ensure any charge on the property is cleared.

I'd have no concern about judgement mortgages or anything else; except to make sure the correct steps are taken to have those cleared.
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Normally the mortgage is cleared when the property is sold. This is based on solicitors undertakings, which is great unless Micheal Lynn is your solicitor.

The OPs question was

LPK12345 said:
Will the judgement mortgage still be attached to the folio once it gets transferred to the new seller?
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The legal answer to that question is Yes, unless the mortgage is cleared first.

The holder of the judgement mortgage will look to be paid out of the proceeds, although they may not act.

The vendors solicitor should ensure the judgement mortgage is satisfied.

The purchasers mortgage provider will not advance funds until the judgement mortgage is cleared.

The purchasers solicitor should not proceed with the sale without ensuring there is clear title.

But if all these things fail, the purchaser is liable for the judgement mortgage.
 
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