Bank Sale - Second Mortgage Issue

[Stephen E.]

I made an offer on a bank sale and it was accepted by the bank. Now a mortgage broker has called my realtor and said that he has a client who holds a second mortgage and that they will take control of the property. He also said they would not sell it for an amount any less than $7,500 higher than our agreed offer with the bank. The schedules and conditions from the bank make it pretty clear that if a second mortgage holder were to pay off the first mortgage holder they could take over the property at any time up until the date of closing, which is in late March. My question is whether this is common in practice or not. Note that this is in Canada. I have no prior experience with bank sales and so am learning as I go.

This feels like a shake down. If the selling price is $7,500 higher it is essentially what you might expect to pay if you got a good deal on a unit in decent condition, which a home owner had spent some money on. This is a former rental unit that needs some renovation, so the selling price has to be right. I am ready to walk if need be.