Whose House is it Anyway?
From the SST:
“In May, Mereana and Steven Pawa paid $151,000 for a house in Moerewa in the Far North at an auction forced by the Bank of New Zealand. The couple and their five children wanted to live in the house on weekdays, and stay at their existing property over weekends so that Mereana – a school principal – would not have to commute 600km a week to work.
“But the former owner, Pouri Cooper, refused to move out.
“The Pawas’ lawyer, Judith Dickens, said the two-month court battle had been stressful and financially tough for the Pawas. Cooper has now been forced by the courts to leave and pay them nearly $4000”
My immediate question here is why did the buyer have to evict the previous owner? Technically, the bank can give notice at the time of foreclosure. It makes sense that the legal ramifications of a squatter should be resolved long before a bank is allowed to sell a property. They can hardly be attempting to claim that they are providing a property with a paying tenant, can they? And I find the following observation logically unfathomable:
“But Auckland University law lecturer David Grinlinton also says that if banks were required to ensure vacant possession it would further disadvantage those people who are worst hit by the recession.”
This statement seems to completely overlook the fact that some person has bought the house and is now paying a mortgage without the ability to use the house. The Pawas, in this case, are likely to be $4,000 out of pocket as the previous owner is unlikely to have money to pay. And for those who think that it is ok to rip them off because they obviously have money and Mr. Cooper is poor (cue violins), I should point out that this is a house in Moerewa, not KeriKeri. It does not follow that the Pawas are hugely wealthy, even if that made it right, which it most certainly does not.
The only satisfactory way this can be resolved is if banks are required to ensure vacant possession. Yes, this will entail the previous owners moving out and yes, I do feel desperately sorry for such people, but staying in a house that is no longer yours is, essentially, theft. It is not right, and turning a blind eye to it because times are hard is a dangerous precedent for property rights.
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Aug 17 09 8:42 am
Buying a property in a mortgagee sale is always a risky proposition and this will often be reflected the price paid for the said property.
Banks do not like having to foreclose in this manner and when a mortgage goes awry do everything they can to resolve it before taking the nuclear option.
You know MacDoctor, if misfortune struck you and you could no longer service your loans that you would take action, presumably by selling your home, long before it came to this point.
I feel sorry for the people in this story but you have to ask how much did they pay for this property compared to its market value and did they go into this purchase with their eyes open?
Aug 17 09 10:27 am
Macdoctor – mortgagee sales are perilous things. They usually involve the property, and not chattels. Therefore you never know what you are going to get when you take possession. No doors, light fittings, plumbing – all can be gone.
Aug 17 09 7:55 pm
This has always been an issue. And if banks could ensure vacant possession (with the help of the authorities if necessary) they could well get better prices for mortgagee sales which would benefit both the bank and those being foreclosed on.
Aug 17 09 10:13 pm
While we can all agree that mortgagee sales are a risky undertaking, it still remains that selling a house with known squatters is a dubiously ethical practice. It should not be condoned in law.
Aug 17 09 10:56 pm
Brian, doors, plumbing etc are not “chattels” and *should* not be removed. That they are reflects only thast sometimes the people evicted are genuine lowlife. The existing owner may or may not have been a “squatter”. Likely enough, in an obviously mishandled show of generosity, the bank allowed him to stay until settlement. No doubt the correct behaviour is to ensure that you do buy with vacant possession, then it is the previous owners responsibility to ensure the same.