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Home arrow Blog arrow Property transfer is nearing and no money to pay the bond, now what?
Property transfer is nearing and no money to pay the bond, now what?

I hear from investors that there are some properties they bought a year and more back that didn’t transfer as they were under development, and now with the increases in the interest rates they can’t afford the mortgage bonds when the properties transfer.

To these purchasers I see a few routes to getting the mess sorted out. There may be many routes, but this is what comes to mind:

  1. They can go to the bond attorneys (bond and transfer) and under the NCA (if applicable) just say to them with a written letter that you can no longer afford the bond due to increases in interest rates. They may or should actually under the NCA, cancel the bond and the deal and one may lose the deposit. This may not be a brilliant idea but definitely better that than repossession. Lesson leant, easier and far less painful. Well maybe not on the pocket but definitely on the trouble and the repossession as the deposit with the property will go anyway later down the road.

  2. The next option is to sell before transfer – one should immediately advertise the property at cost, in other words that at least one doesn’t lose the deposit and fees. Try to get the best deal and an offer ASAP, back on back to the offer that was about to transfer, send it quick to the transferring attorney. They will transfer both offers in the same time and you won’t have to pay not even one months bond. Problem solved. But if you can’t do that and find yourself close to the deadline you may just try option number one. If number one doesn’t work, find an investor and try to sell at best price possible. Anything is better than repossession if that is a real threat.

  3. The other option is to take transfer count the pennies and pence and make sure you can hold on to it until you sell it, provision for some 12 to 24 months if you want to sell with some profit, though that profit may just be non existent as it would have been swallowed up in 12 months by the shortfall in the mean time. (I am assuming of course this is a new development and usually the rents are far lower than the selling prices). If one can hand on for 24 months the market may just turn around enough to make some profit and be home free with this venture.

  4. Last option I see if for those that bought more than one property off plan from developer and now sit awaiting for a few bonds not only one. The total of the bonds may no longer be affordable. In this case one can just sell some properties waiting to transfer, enough to make the bonds of the remaining affordable. Either way in option 4 all option 1 to 3 apply to get rid of some properties before you can no longer pay the mortgage bonds and start hurting financially.

Well, one thing I have to say, the down side to property and real estate is simply it does not move fast. You can’t sell it as fast as you buy it and if you need to sell fast, it can become a problem as property unlike the stock market, you don’t press a button and the stock is sold.

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Steve - Bond questions   | | 2008-10-16 14:18:35
What happens if I can not pay my bond anymore? I live in the USA. How does that effect me? Can the bank come after me?
Anonymous - re: Bond questions   | | 2009-07-27 05:14:28
Steve wrote:
What happens if I can not pay my bond anymore? I live in the USA. How does that effect me? Can the bank come after me?
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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.

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