Hi experts. I hope somebody can help me.
We are selling a property for 6M. The property is currently mortgaged with a bank, with roughly 2M balance. There are interested buyers, but they will also have it bank financed. A buyer offered to make 1.5M Down payment and balance financed by his bank.
We are not completely familiar with how this kind of arrangement works. We heard that the buyer’s bank will issue a “Bank Guarantee” only after the Title has transferred to the buyer.
1. Is this correct and can we trust this kind of arrangement? If so, what “assurance” or fall-back do we have in case we transferred the title but the bank doesn’t issue a “bank Guarantee”?
2. Do we need to transfer the title? If we do transfer the Title, would that mean we need to settle our Mortgage with our bank, and pay the corresponding taxes (Capital gains & Doc Stamp)? What if we don’t have enough cash to pay the Mortgage completely?
3. What kind of contract do we execute if the buyer makes a 1.5M dp – a Contract to Sell, some Conditional sale contract where we retain title until we are fully paid, or a DOAS?
4. Is a “Bank Guarantee” as good as cash?
5. When do we pay brokers for their commission, upon receipt of Down Payment or upon receipt of full payment?
We are at a loss on how this works and would appreciate if anybody can enlighten us and show us the “step by step” in getting this kind of deal done.