What is a Shortfall Transfer?
A shortfall occurs when a liability exceeds the amount of cash you have available to settle that liability. Thus, a shortfall transfer occurs when the purchase price is not enough to cover the costs of the liabilities such as the cancellation of the sellers existing bond, agent’s commission and the rates clearance figures payable to Council, to only mention a few.
There are a couple of options that can be considered to still have a successful transfer. The Seller can, if he is able to, pay in the shortfall amount in order for the matter to proceed. The other more common option is, to apply to the Sellers Bank, requesting them to allow the matter to proceed to register with the amount available on registration, the Seller will however be required to sign an acknowledgement of debt with the Bank to pay off the shortfall after the property has been transferred. The Bank will normally implement a debit order and deduct the shortfall from the Seller in monthly instalments.
Although the matter will be delayed while waiting for the Banks approval, shortfall transfers can be registered successfully. Provided all parties involved are aware of the shortfall and do what is required of them, VTC can transfer the shortfall property as quickly and as smoothly as any other transfer.