First Time Home buyer: How common is it for Agent to ask Purchaser/Buyer to use part of their deposit to settle Seller's municipal and eskom arrears?

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captainscarlet

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I put in a R1.8m+R0.5m deposit offer on a 4-bed house currently under executorship. I believe that's the legal term they use when an owner dies. The husband died a few years ago from what I gather. Since then the wife seems to have been struggling to maintain the place. Eskom and water were both disconnected. They made a plan to install a solar setup and a borehole. The pool is not working, the drug addict daugther apparently sold the pump. The house itself is in good shape. I did not see any cracks or sagging ceiling boards. But I did add an inspection as a suspensive condition. The area is also great. I like it. Good gated community. It was listed at R1.9m which is significantly less than the average price of a similar sized house in that area. A 4 bed house in that place sells for at least R2.1m. I even asked the Agent if there is a major issue as the price sounded too good to be true. She told me nothing is wrong, it's just a distress sale. I went to have a second viewing and everything looks good. As I was about to sign, that's when she disclosed the rates issue and requested to use part of my deposit to pay the oustanding municipal and eskom accounts. I told her I would think about it and signed the offer anyway. After some thinking, I realised that the deposit arrangement would put my money at a huge risk if anything goes wrong in the sale. The owner, the surviving wife, is 80yrs old. If she were to drop dead, I'd be stuck. I would never get my money back. Anyway, to cut the long story short, has anyone here come across a similar situation. Should I be worried. Why are they not arranging short term finance against the house to cover the debt. The house should be paid off by now as it was bought in 1999 based on info from the Property24 report. Can I trust this agent and their conveyancer? I asked her how much is owed but she did not disclosed. I presumed it's because my offer had not been accepted yet.

Edit: Agent also said they had a deal that fell through as the buyer couldn't wait for the letter of executorship
 
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You should be worried. I wouldn't trust an agent and conveyancer who even hinted at this kind of arrangement.
Does the agent/conveyancer like lindbolletjies?
 
bwana said:
Walk away.

EDIT: just saw it's probably too late for that if you've put an offer in. How much is owed?
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She didn't disclose the amount when I asked. I'll ask her again. But I am suspecting it's a large sum
 
captainscarlet said:
The agents said it's not a big deal and that I must trust them as they have a very good reputation in the area.
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/facepalm
Uhuh and I don't know you (the agent). Hard No.

Make a proposal agent pays the bill and recoups it after house is sold from seller. Agent can take a personal loan if they don't have the money.
 
biena said:
/facepalm
Uhuh and I don't know you (the agent). Hard No.

Make a proposal agent pays the bill and recoups it after house is sold from seller. Agent can take a personal loan if they don't have the money.
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Had the same thoughts. If it's "not a big deal", the agent must use his moneyto settle the bills.
 
captainscarlet said:
Had the same thought. If it's "not a big deal", the agent must use his moneyto settle the bills.
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bill is probably 300k+ (debt / interest / fines etc)

BUT you put in a offer if they accept it then I hope the inspection fails, if it passes well then you have to continue with it, clearing that muni/eskom debt will not happen from seller side. They will probably put pressure on you to clear it. Not contining and agent will come after you for commision since you broke contract. Disclosing the debt before you signed was really sneaky as you cannot say it was not disclosed. This whole thing smells.

Which muni ? What about muni debt reprieve (if debt is old enough)
 
If the Letter of Executorship has not been issued then the property can't be sold, no contract will be valid without that.

If everything is in order then the conveyancers can arrange bridging finance to pay the rates.

Don't consent to paying any debts from the deposit.
 
biena said:
bill is probably 300k+

BUT you put in a offer if they accept it then I hope the inspection fails, if it passes well then you have to continue with it, clearing that muni/eskom debt will not happen from seller side. They will probably put pressure on you to clear it. This whole thing smells.
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If you read my edit. You will see that they had a buyer before me. But the deal fell apart and I believe it was because of the oustanding bills not the executorship.
 
bokka1 said:
If the Letter of Executorship has not been issued then the property can't be sold, no contract will be valid without that.

If everything is in order then the conveyancers can arrange bridging finance to pay the rates.

Don't consent to paying any debts from the deposit.
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Will the bridging finance take time?
 
Excuse my ignorance, but the municipal and Eskom accounts are the sellers responsibility. Does the transfer attourneys not settle these accounts and deduct the money from the proceeds of the sale? Outstanding rates and taxes will not hold up a sale if it goes through an reputable lawyer.
 
Sheppard_za said:
Excuse my ignorance, but the municipal and Eskom accounts are the sellers responsibility. Does the transfer attourneys not settle these accounts and deduct the money from the proceeds of the sale? Outstanding rates and taxes will not hold up a sale if it goes through an reputable lawyer.
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If something goes wrong with the sale, how would the buyer recover their full deposit? The money at that point would be stuck in the municipal and eskom accounts.
 
Sheppard_za said:
Excuse my ignorance, but the municipal and Eskom accounts are the sellers responsibility. Does the transfer attourneys not settle these accounts and deduct the money from the proceeds of the sale? Outstanding rates and taxes will not hold up a sale if it goes through an reputable lawyer.
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Depends on lawyer, some do not. Found that it was too much trouble and now make it the sellers responsibility to obtain the clearance certificates. Cannot register a property without clearance certificates so it does hold up the sale.
 
Jam Sandwich said:
I wouldn't do it.
Sellers problem to sort it out
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It does happen more often than you think and it depends entirely on how much the buyer wants the property - the outstanding municipal debt notwithstanding..

The municipal debt must be settled in full before transfer of ownership can be registered at the Deeds Office, so thhis can actually expedite the sale.
 
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