Ex forcing sale of shared property with deliberate IVA

Candyapple · 18 May 2017 at 8:04AM

richy4 wrote: »

If he applies for an IVA, will this affect her credit record? The mortgage is joint, but his outstanding debts are his own. I understand from some quick research via Google that her credit should be untouched as it is he who has issues.

Yes it will definitely affect her credit history - in fact the day since they took out a joint mortgage, any late payments or credit searches that he has made since then have also been made in her name too. If you are financially associated with someone it means your credit files are searched at the same time the other person applies for something. If the other person has a history of late payments, defaults, CCJs this in turn will affect the other person's credit history too. It's why lots of people are wary of getting joint bank accounts with partners if one person has a poor credit history and the others is good.

Will your friend be able to get a mortgage on the property on her own in her name only based on only her salary? If she can't then the only option to remove him from the mortgage and also being financially connected is to sell up and then split the proceeds accordingly.

Once the property is sold and funds divided, your friend will need to contact all 3 credit reference agencies and inform them that she is no longer financially associated with him. In most cases she will have to fill out a form and wait a couple of months for the association to be removed.

richy4 · 18 May 2017 at 8:32AM

She certainly hasn't been 'chilling' in the property as she has become liable financially for all of it including massive hikes in the service charges and paying off additional loans taken out on initial purchase. I agree it was stupid of her to leave the situation as it was and constantly reminded her of this. However he chose to leave and they did not agree or decide upon 'shares' at any point.

So the best thing to do is to check her credit score/report on the usual channels like MSE Credit Club and Noddle, Clearscore etc to see how bad he has screwed up their joint credit file?

I guess if it is badly screwed up due to his loans and other debts then even if she wanted to get him off the mortgage and continue herself he has also now eliminated any chance of her doing that due to what he has done to her credit history on his side.

She can afford to take the mortgage herself, if he agrees. I think he would probably agree however the 2 major issues of this are the credit history might be too far gone now for her given what he has done and also the current mortgage deal ends later this year so to get out of it early will incur the usual early charges?

getmore4less · 18 May 2017 at 8:45AM

richy4 wrote: »

Asking on behalf of a friend:

My friend lives in a property which she is on the mortgage with her ex. They bought several years ago. He contributed only towards furniture and solicitors fees on initial purchase. While he lived in the property, he paid half the mortgage payments.

He moved out 3 years ago. She carried on living in the property and paying for everything, she also put in the deposit money on initial purchase. The mortgage has continued in joint names until now.

first step would be to work out what equity he has based on reasonable assumptions.

if we get the following can make a approximation of his current equity.

1. The total costs at the start, who paid what and how much was mortgage.

2. how much of the mortgage he paid and for how long.

3. value when he move out/stopped paying the mortgage and the amount of mortgage left at that point.

4. value now.

eg. (JUST AN EXAMPLE)
1. total cost £200k, he paid £2k she paid £18k mortgage £180k
2. paid the mortgage 50:50 for 5 years.
3. £250k & £150k
3. £300k

1,2 at the start the ownership split is 46:54
3. he owns 46% of £250k owes 50% of £150k net £40k or 16% of £250k
4. now owns 16% of £300k that's now £48k.

there is a the additional adjustment like the occupier owes rent on the bit they don't own and the non occupier owes that % on maintenance/improvements.

The sensible thing would have been to have the beneficial ownership documented with a trust deed,,, in the absence you have to look at actions that formed the intent, eg was the deposit a % purchase or just a load to the property, that could change the ownership o 50:50 at the start.

AnotherJoe · 18 May 2017 at 8:48AM

richy4 wrote: »

She certainly hasn't been 'chilling' in the property as she has become liable financially for all of it including massive hikes in the service charges and paying off additional loans taken out on initial purchase. I agree it was stupid of her to leave the situation as it was and constantly reminded her of this. However he chose to leave and they did not agree or decide upon 'shares' at any point.

So the best thing to do is to check her credit score/report on the usual channels like MSE Credit Club and Noddle, Clearscore etc to see how bad he has screwed up their joint credit file?

I guess if it is badly screwed up due to his loans and other debts then even if she wanted to get him off the mortgage and continue herself he has also now eliminated any chance of her doing that due to what he has done to her credit history on his side.

She can afford to take the mortgage herself, if he agrees. I think he would probably agree however the 2 major issues of this are the credit history might be too far gone now for her given what he has done and also the current mortgage deal ends later this year so to get out of it early will incur the usual early charges?

No reason they cant agree to coincide that with the current deal ending, if ex tried to force a sale though courts it could take that long and I'd be confident would cost more.

She needs to see a solicitor (this half a***d approach has got her into this mess in the first place) even if only to understand the boundaries of what the equity split should be. They could then agree a mutual settlement using that as a basis and she'd also know if she was looking ata definite sale or could afford to mortgage it by herself.

Pixie5740 · 18 May 2017 at 9:33AM

Your friend has had the benefit of continuing to live in the jointly owned property whilst the ex has had to pay rent to live elsewhere.

I don't really understand why your friend thinks that the ex wanting to sell the jointly owned asset has anything to do with increasing his debt. That makes no sense. If anything it seems incredibly sensible that someone who is in so much debt where an IVA is the best solution would a) want to decrease the amount of debt because whilst the joint mortgage remains he has joint and several liability for the whole debt even though not living in the property, and b) want to raise any funds available to them such as the equity in this property to help reduce the amount of money owed.

Thrugelmir · 18 May 2017 at 10:28AM

richy4 wrote: »

However he chose to leave and they did not agree or decide upon 'shares' at any point.

That's life. You just have to pick yourself up and get on with it. Little point looking backwards. It's now that has to be resolved.

Candyapple · 18 May 2017 at 11:22AM

richy4 wrote: »

She certainly hasn't been 'chilling' in the property as she has become liable financially for all of it including massive hikes in the service charges and paying off additional loans taken out on initial purchase. I agree it was stupid of her to leave the situation as it was and constantly reminded her of this. However he chose to leave and they did not agree or decide upon 'shares' at any point.

So the best thing to do is to check her credit score/report on the usual channels like MSE Credit Club and Noddle, Clearscore etc to see how bad he has screwed up their joint credit file?

I guess if it is badly screwed up due to his loans and other debts then even if she wanted to get him off the mortgage and continue herself he has also now eliminated any chance of her doing that due to what he has done to her credit history on his side.

She can afford to take the mortgage herself, if he agrees. I think he would probably agree however the 2 major issues of this are the credit history might be too far gone now for her given what he has done and also the current mortgage deal ends later this year so to get out of it early will incur the usual early charges?

Yes, definitely get her to check all 3 of her credit reports to check the damage.

Just to be sure, even though your friend has been paying the mortgage all this time on her own, there is a difference between that and being able to get a mortgage on your own in your own name.

When they first bought the property, the mortgage was based on 2 incomes. Now after several years and no doubt the property has also increased in value, is your friend's income enough to satisfy being able to remortgage the property on her own income solely? If it's not, then she'll need to sell.

Your friend will effectively be getting a remortgage. this involves a legal process to remove the ex from the mortgage and - as the mortgage is a loan secured on the property - part of that process will deal with removing him from the deeds too. So if she gets a new mortgage in her name only, he will be removed from the mortgage and the deeds as part of that process.

I think the best advice your friend can do now is speak to a solicitor regarding exactly how much this is going to cost her in terms of % of proceeds given to both parties especially where there were no legal contracts drawn up at the start to specify that he didn't contribute towards the deposit etc.

EachPenny · 18 May 2017 at 11:59AM

I can't see it anywhere in the posts so far, but were they married and did they have children together?

Threatening to enter into an IVA is a classic strategy in separation cases - a friend was in just this situation and called their ex's bluff. The ex went into an IVA and is now having to live with the consequences for at least 7 years. The ex was poorly advised.

With an IVA a shared property and mortgage can only be included if the co-owner agrees. The ex can get an IVA which will have an impact on your friends credit history too, but it cannot force the sale of a joint asset. If the friend is clear from the start that they will not agree to include the house in the ex's IVA then the IVA provider has to negotiate with the creditors to see if they will accept the IVA without the house included. There is no certainty that they will, and also a risk they will then seek to go down the bankruptcy route which may then cause bigger problems.

In my friend's case they were advised to wait until the ex went bankrupt and then negotiate with the bankruptcy service as this was likely to be easier than dealing with the ex. But that was advice applicable to their particular circumstances, it might not suit the OP's friend.

Your friend needs a good solicitor, and one who understands debt/IVA/bankruptcy law as much as family/property law. These disciplines don't always overlap, so they may end up having advice from two different solicitors - which can get very expensive.

If they can negotiate a deal with the help of solicitors then that is possible the best outcome they can hope to achieve.

EachPenny · 18 May 2017 at 12:06PM

Candyapple wrote: »

Just to be sure, even though your friend has been paying the mortgage all this time on her own, there is a difference between that and being able to get a mortgage on your own in your own name.

I completely agree with this. My friend had been paying the mortgage in full right from the start and was the main income earner for the family. But changes in the mortgage affordability criteria meant when they asked for a remortgage (below the existing monthly payment level) to buy the ex out they were told 'no way', most banks wouldn't even give them an appointment to discuss the options. In the end the only choice was to keep the ex on the mortgage and take up an offer from the existing mortgage company for a slightly cheaper fixed rate deal, which is still far more expensive than the market best.

richy4 · 18 May 2017 at 6:34PM

Thank you so much again for your replies, much appreciated especially the detail.

Someone asked for a bit more clarity of the situation, the context is they were jointly on the mortgage and all documents since purchase several years ago. No children involved and not married.

Ideally, she would like to keep solicitors out of the equation as currently she does not know if her ex is actually bluffing or if this is actually serious.

One point I'd like to re-confirm is that if the ex's IVA goes ahead, he will most likely try to get equity from the shared ownership of the flat. If my friend totally refuses to allow this, can she actually do this and flat out refuse? And if so, does the flat still enter into the IVA despite no equity or money getting involved. So the flat is still an asset which no one can do anything with for the length of the IVA?

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Ex forcing sale of shared property with deliberate IVA

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