Buying a Mortgagee Sale Property
What is different when the seller is a lender, and what to check
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A mortgagee sale happens when a lender repossesses a property because the owner has defaulted and sells it to recover the debt. These sales can be good value, but the contract is written to protect the lender, so the buyer takes on more risk than usual.
Optimum Lawyers is a property law firm in Parramatta Square, led by principal solicitor Wisam Assi. We act on purchases, sales, settlements and transfers in every Australian state and territory.

Send us the mortgagee sale contract
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How the contract differs
- The property is usually sold as is, and the lender gives few, if any, warranties about its condition.
- Special conditions often limit your right to claim for defects, missing items or errors in the description.
- The lender may not hand over keys, manuals or certificates the owner kept.
- Settlement dates and penalty interest clauses are often strict.
Vacant possession
Check whether the property is being sold with vacant possession, and what happens if the former owner or a tenant is still living there at settlement. The contract should say who is responsible for removing them and any belongings.
Checks before you sign
- A building and pest inspection, because the property may have been neglected.
- Searches for unpaid rates, water and strata levies, and how they are adjusted.
- For units, the strata records and any outstanding levies on the lot.
- Any unapproved work, since the lender will not fix it.
Auctions and tenders
Many mortgagee sales are run by auction, so the usual auction rules apply, including no cooling-off. See buying at auction.
What clients say
“Wisam at Optimum Lawyers recently helped me through the purchase of an investment property. He knows exactly what he's doing and what to look out for”
David Muscat, Google review
Questions about mortgagee sales
Are mortgagee sales cheaper?
Sometimes, but lenders must take reasonable care to get market value, so bargains are not guaranteed.
Can I claim for defects in a mortgagee sale?
Usually not. The contract normally sells the property as is and limits claims.
What if the former owner is still living there?
Check the contract. It should say whether vacant possession is given and who must remove occupants.
Is there cooling-off on a mortgagee sale?
It depends on how it is sold. There is none at auction. Check the state rules for private sales.
Related: Buying at auction | Contract of sale review | Property dispute lawyers
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