Letter of Consent and Postponement

wary

Apologies if this has been covered already ...

I'm changing my mortgage to a new lender and because we have a child who is over 18 living with us part time, they've been requested to sign a Letter of Consent and Postponement, which the lender explains as having the purpose of, should the lender ever need to sell the property:
- to make them leave the house
- to ensure the lender has first claim to the proceeds of the sale

I gather this is fairly standard procedure but my lender is strongly advising us to seek independent legal advice before signing.

Firstly, can someone clarify what signing this document would mean, in particular whether they'd have less rights than had they been under 18 and not been required to sign anything? My biggest concern is that this could in some way diminish their rights to their inheritance of the estate.

Should my wife and I both be killed, would the oldest child have the option to take over the mortgage payments as they would now jointly inherit the house? Or would the signing of this form entitle the lenders to insist on repossessing and selling it (at a low price) even though the monthly payments could still easily be met?

Would it be worth seeking legal advice before signing? If this is standard paperwork from what is a reputable lender then I don't want to throw money away unnecessarily.

silvercar

It is standard practice. Anyone under 18 cannot hold a tenancy so would have no rights to remain in property while a mortgage lender had a charge on the property. If they were under 18 the presumption is that they wouldn't live in the house on their own and would be cared for elsewhere. It doesn't effect their inheritance.

The oldest child could repay that mortgage by taking a mortgage out of their own if they so wished. There is never an entitlement to take over another person's mortgage - even for a spouse.

wary

Thanks Silvercar.

As a more general question, is it standard practice to engage the use of solicitors when switching to a new lender? We've also been asked to sign other legal forms which presumably give the new lender first charge, and although this can be done in the presence of a solicitor it can also be done in the presence of one of the lender's own officials (presumably at one of their branches).

Being a reputable lender I'm sure there's nothing untoward about what we're being asked to sign, but you never know ...

silvercar

As a more general question, is it standard practice to engage the use of solicitors when switching to a new lender?

Yes. Though whether you appoint your own solicitors or use the ones they offer for remortgages is a matter of choice, cost, conveniance. We used the lenders recommended remortgage team and it was all done by post - so nothing was actually witnessed by the lender.

Richard_Webster

It isn't anything to worry about.

Unfortunately there have been extreme cases where an adult occupier has refused to vacate when a lender obtained a possession order because:

(a) he didn't know about the mortgage at all; and
(b) he had contributed financially to the purchase/improvement of the property and therefore was able to argue he was entitled to a beneficial share in its value.

The courts have upheld his right to stay in that kind of case and so all lenders go to these lengths to make sure that the occupier does know about the mortgage and postpones any rights he has to those of the lender.

It does not affect any rights he may or may not have against the registered proprietors of the property, but only that he might have to claim against them out of any money left over after the lender has repossessed and sold. It makes no difference to what you put in your wills etc, etc. In the vast majority of cases this is all very theoretical as the person does know about the mortgage and isn't asserting any rights - but they still want the signature to say this.

princeofpounds

I believe the reason that they recommend the use of solicitors is that they are a business and you are a consumer, so the law requires you certain levels of protections that a normal business contract wouldn't enable you to have.

If they did not advise you to use a solicitor, they are worried that you might argue you weren't given the opportunity to understand the contract if you wanted to back out of it. This basically proves that they tried to point you to independent expert advice in your decision.

Whether you want to use one or not is up to yo really. I don't know what is standard practice.

manc01

Sorry to drag up old thread, but i 'm in similar situation.

My wife needs to sign letter of consent as she's not the registered owner i.e not joint mortgage, wondered what would happen if i died and my wife obviously wanted to live there, would it just be a case that the life cover would pay off the mortgage and my wife could still live there or because she was not the registered owner the bank would have to take it back and do want they want with it??

Thanks in advance.

Richard_Webster

If the life cover paid off the mortgage then the lender would have nothing to do with it at all. If you have made a will then presumably you have left your property (including the house) to her.

Read my previous post that explained what the form is for.

tbs624

silvercar wrote: »

. Anyone under 18 cannot hold a tenancy.. .

Not so - covered under "equitable tenancy"

manc01

Richard_Webster wrote: »

If the life cover paid off the mortgage then the lender would have nothing to do with it at all. If you have made a will then presumably you have left your property (including the house) to her.

Read my previous post that explained what the form is for.

Cheers Richard, just wanted to make sure that was what it meant from your previuous post.