Sale and rent back landmark case?

franklee

How did this ruling come about as I bet the lender didn't know anything about a life tenancy:

http://news.bbc.co.uk/1/hi/england/shropshire/8142431.stm

david29dpo

Some good news for a change!

clutton_2

""
The judge ruled they could stay in the property for life by either taking out a new mortgage and becoming the owners, or through renting the property from the mortgage lender who had repossessed it.
He said when they died, their children could inherit the tenancy. ""

i think these renters will have huge difficulities getting another mortgage - as their financial inabilities is why they were about to be repossessed in the first place

i also think that the mortgage lender will appeal this as it will set such a benchmark.

Why should lenders be forced to take on the role of Landlord - they lent money to a couple who were unable to keep up their financial commitment in the first place.

I utterly agree that the renters should not be allowed to suffer because the Repossessions Stopped company were in financial difficulty - however - for a judge to grant this couple ongoing inheritance ownership is bonkers......

this whole Sale and Rentback SARB business is currently under regulation by the FSA - starting this month with interim regs coming in - and final regs being brought in by the end of the year

Richard_Webster

If we assume that the buy and rent back company applied for a BTL mortgage it probably didn't tell the lender that the couple were to be given a tenancy for the rest of their lives. The lender would have assumed an ordinary AST so that it could evict them. Possibly the solicitor that acted for the lender was at fault in not checking the kind of tennacy although possibly the company didn't tell him all the details.

This will simply mean that ledners in this kind of siaution will have to check the details more thorughly. If their surveyor goes round while couple still there before purchase then he can ask whether they are getting a life trenancy and if they say "yes" then lender refuses to lend.

Thrugelmir

franklee wrote: »

How did this ruling come about as I bet the lender didn't know anything about a life tenancy:

http://news.bbc.co.uk/1/hi/england/shropshire/8142431.stm

Most likely outcome will be that the lender will end selling the property through an auction with a sitting tenant insitu.

The reason for the lender being unhappy with this is that they will ultimately incur far higher losses.

Repossessions Stopped no doubt had a sizable credit line with one institution, so possibly the outcome of this case affects people in a similar position.

franklee

My guess is that the sale and rent back firm must have been deceiving someone along the way, probably both the tenant and the lender as no lender would have agreed to such a loan. Interesting that the tenant's claim won out over the lender's, normally I'd expect it the other way round when the landlord has broken the terms of his mortgage. So this case does seem to set an interesting president that could have far reaching consequences.

If lenders have to be more diligent on checking up that that's a good thing IMO.

Thrugelmir

franklee wrote: »

My guess is that the sale and rent back firm must have been deceiving someone along the way, probably both the tenant and the lender as no lender would have agreed to such a loan. Interesting that the tenant's claim won out over the lender's, normally I'd expect it the other way round when the landlord has broken the terms of his mortgage. So this case does seem to set an interesting president that could have far reaching consequences.

If lenders have to be more diligent on checking up that that's a good thing IMO.

The tenant entered into a contract in good faith. The terms of the tenancy being correctly stated in the sale contract.

Repossessions Stopped financed the deal by obtaining a BTL mortgage on the property. Most likely without disclosing the terms of the tenancy agreements they were granting to the property sellers.

Although the lender has charge over the property. The tenants rights took precedence in the judges mind. As the tenant would not have entered into the sale contract without these terms.

On a broader issue there is a sense of social justice in the decision. As kicking the tenant out onto the street solves nothing.

franklee

Thrugelmir wrote: »

The tenant entered into a contract in good faith. The terms of the tenancy being correctly stated in the sale contract.

Repossessions Stopped financed the deal by obtaining a BTL mortgage on the property. Most likely without disclosing the terms of the tenancy agreements they were granting to the property sellers.

Although the lender has charge over the property. The tenants rights took precedence in the judges mind. As the tenant would not have entered into the sale contract without these terms.

On a broader issue there is a sense of social justice in the decision. As kicking the tenant out onto the street solves nothing.

It depends on the details of the case which we don't have but I had thought the promise to stay for life was more an informal one.

Thing is I still don't see how a sale would go through if the terms of the sale and tenancy agreement really said the tenants and their children could rent for life. Surely the buyers solicitor would have known this breached their client's the mortgage terms and refused to act?

clutton_2

i dont think legally there is any such entity as a Tenancy for life which is drawn up now ... maybe Richard Webster can enlighten us......