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Postby nhowarth » Tue Jan 22, 2008 8:02 pm

pantheman wrote:Heres another option, if when you sign the contract, the developers bank gives you a waiver over you piece of ground ( ie once you paid for your flat, house or whatever), this would solve the problem of worrying if the developer goes but. As the bank will not then have any claim to your property.
Yes - what anyone wishing to buy mortgaged property MUST do is insist on getting a 'mortgage clearance certificate' from the financial institution that loaned the money BEFORE signing the contract of sale.

Someone recently wrote to me asking about the following clause in their contract of sale:
    “The bank which has a mortgage on the project will issue a declaration confirming that the separate Title Deed issued for the property will not be burdened with the existing mortgage which is currently filed on site.”
(As the bank will not issue a declaration until separate Title Deeds are issued, they would be at risk if the developer went bankrupt or if the bank called in the loan in the meantime. There is also another problem inasmuch as you cannot force the developer to repay the mortgage. So they could end up in the situation of never being able to get Title to their property).

There are a lot of things going on here which I believe are designed to lull buyers into a false sense of security and put them off their guard.
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