bought with a friend and now have big problems

dander

Have you thought about looking at what you can do about the relationship rather than with the house? You say you are barely talking - I wonder if you could get some kind of mediation between you both. It might be something where if you could just get someone to help you talk to one another about the problems you could come to some agreements - if he realises that he could lose his home over this he may start to come to his senses about how he's doing the DIY.

If he's in a lot of debt and struggling, he could be under a lot of stress and/or depressed - which could be contributing to difficult or irrational behaviour. If you could find some way to support him through this, he might return the favour - maybe there's something you could do about giving him a few months off paying the mortgage in return for him getting some work done - to your specification. It could work out a lot cheaper than £17k!

ktm_hansi

In terms of why I am having to shoulder the burden of the redemption fee is because my flatmate has no capital in the house (as I've mentioned he has now devalued it by ripping out two rooms) and I do. The mortgage company isn't going to care where the money comes from as long as they get their money. I can't take money from him if he hasn't got any to begin with! I have already suggested that we get a contractor in to pay to renovate the house but I have had no response from him.

Unfortunately I did walk into this situation non the wiser as the only contract we had drawn up only dealt with the finances of the house ie my £32k comes out first and then the profit / loss is split 50/50. There was no discussion / agreement on how we were going to do the house up. Also my flatmate was not in a whole lot of debt 15 months ago. Over the year he has racked up debts and to this day is still not addressing the issues. He is only now being declines for credit cards.

Dander - I agree we should try and sort the relationship out and see whether we can hold onto the house. In terms of helping him out financially, as I mentioned, my partner is about to have a baby and I am already feeling the burdon of that. I also think paying for the half the bill when I am only there 4 days out of a month is a big help to him. If I give him a few months off the mortgage he is likely to have a big spending spree like he does on a regular basis!

silvercar

only contract we had drawn up only dealt with the finances of the house ie my £32k comes out first and then the profit / loss is split 50/50.

If you sell at a loss, after redemption fees, he will owe you money.

BobProperty

I'm sorry if I sound a bit harsh but:

ktm_hansi wrote:

In terms of why I am having to shoulder the burden of the redemption fee is because my flatmate has no capital in the house (as I've mentioned he has now devalued it by ripping out two rooms) and I do. The mortgage company isn't going to care where the money comes from as long as they get their money.

They won't want it unless and until you sell or remortgage.

ktm_hansi wrote:

I can't take money from him if he hasn't got any to begin with!

That hasn't stopped several credit card companies by the sound of it.

ktm_hansi wrote:

I have already suggested that we get a contractor in to pay to renovate the house but I have had no response from him.

Who is paying and how? No builder is going to do the work on the grounds that you will sell the place for a profit and then pay them later.

ktm_hansi wrote:

Unfortunately I did walk into this situation non the wiser as the only contract we had drawn up only dealt with the finances of the house ie my £32k comes out first and then the profit / loss is split 50/50. There was no discussion / agreement on how we were going to do the house up....

Interesting that you accept that you may make a loss. How have you both planned to cover for this loss if it arose?
I still would like to know if you each have a mortgage or have a joint mortgage on this property. What would happen if the flatmate stops paying his (his half) of the mortgage?

Ian_W

Bob,
AFAIK it isn't possible for each to have their own mortgage. If 2 names are on the title, both names must be on the mortgage otherwise the lender would have great difficulties if one defaulted [ie: you can't repo and sell off half a house]. I think from reading the OPs other posts it is fair to assume that it is a joint mortgage which ktm is concerned his former friend will cease paying his half of due to other debts.

ktm,
I don't think anyone here has a magic bullet. There are only 2 ways to resolve it that I can see. Either find a way to buy him out and get him out of the property to stop his bodged DIY losing further value or get an agreement with him to sell in its present state and take a loss on the property. Providing your sale price exceeds your outstanding mortgage the latter may well be the best option.
Either option requires you to sit down and discuss this with your former friend. He joint owns the property and you are both, jointly, liable for the mortgage debt. In practice if he owes money elsewhere and you don't you'll probably end up being the one the lenders persue, if it comes to that.
Legally there may be ways you can force a sale but that's going to take a lot of time and money.
Sorry it's not a particularly helpful post. You're in a very difficult situation but I don't see a short term way to resolve it other than coming to some agreement with your ex-friend.

BobProperty

Ian_W wrote:

Bob,
AFAIK it isn't possible for each to have their own mortgage. If 2 names are on the title, both names must be on the mortgage otherwise the lender would have great difficulties if one defaulted [ie: you can't repo and sell off half a house]. I think from reading the OPs other posts it is fair to assume that it is a joint mortgage which ktm is concerned his former friend will cease paying his half of due to other debts.

BobProperty - specialist subject: awkward/apparently stupid questions.
I'm 99% sure you are right Ian in your assumption of the situation, but the OP hasn't actually said that the property and the mortgage are in joint names. There could be some unusual arrangement in this "trust deed" that was mentioned.

Ian_W wrote:

....Providing your sale price exceeds your outstanding mortgage ......

I think the concern is, following the poor quality DIY work, that the value of the property minus selling costs and redemption fees will be less than the mortgage outstanding.

ktm_hansi

sorry I should have specified that my flatmate and I have a joint mortgage on the property and the payment comes out of my account. If he walks away I will still end paying for the monthly repayments and his name will remain on the title deeds, which means if I sell is three years at a profit, he is entitled to 50% of that profit. Of course I could take legal action but any profit made will go to the solicitors. I will go over the trust deed again but I am 99% sure there is no clause for work done to the house nor if he doesn't pay the mortgage.

Thanks for your advice Ian W but if we sell now we will make a loss! This negative amount will come out of my £32k and yes my flatmate will owe me money. However without sounding negative, I would be hard pushed to get this money from him as he likely to 'vanish' and if I do catch up with him he will cry poverty!

Your right, there is no magic soluation and the best way forward is to try and talk reason to him and see whether we can get a contract raised (maybe too late for that) to find a way of working out a fair compromise. Ideally I would love to buy him out and rent his room out but the mortgage company will not let me take on the whole mortgage. He too wants to be bought out as he wants to buy a property on his own, but at the moment we are in stale mate until I can find these funds.

I would suggest to anyone who is contemplating buying with a friend / stranger / family member to get everything written down in a contract from work done to the house to if soemone doens's pay the mortgage!

mountainofdebt

is that everything is 50/50, in reality its not.....you pay 50% of the monthly bills even though you are there about 10% of the time as well as half the mortgage

I guess the bill aspect of the situation wouldn't be too much of an issue if it weren't for the fact that your (ex?) friend seems to get bored very quickly with the DIY projects he's started and moves on to the next one before finishing the one he's on.

Assuming that your mate wants to move out - presumably to rent in the short term as he is strapped for cash - is there anyway that an agreement could be drawn up where by you could take over his %age of the house and mortgage - and charge him rent, with him responsible for the ulitility bills having had the house valued so that when you are in a position to effectively buy him out, you will have a figure to go on.

That way you could stop him doing any more 'home improvements' although he may place the burden of doing up the place on you but at least you know where you stand financially.

sophistica

Why don't you talk to a broker about converting the mortgage to a "buy to let" that way they won't take any income into consideration they will only be concerned with the letting issue. Have you tried a broker?

BobProperty

I’m going to be blunt again –

ktm_hansi wrote:

….He too wants to be bought out as he wants to buy a property on his own, …

He doesn’t want much does he? He’s got his name on the mortgage on a property which is at 100%+ of LTV and he will presumably need 100% mortgage on a new place plus all buying costs.

mountainofdebt wrote:

…Assuming that your mate wants to move out - presumably to rent in the short term as he is strapped for cash…

He wants to buy :eek:

mountainofdebt wrote:

… is there anyway that an agreement could be drawn up where by you could take over his %age of the house and mortgage - and charge him rent, …..

Don’t see how this helps. He’s already supposed to be paying half the mortgage and may be struggling to do that. What difference does it make if he struggles to pay the rent instead? He will still have his name on the property at the Land Registry.

sophistica wrote:

Why don't you talk to a broker about converting the mortgage to a "buy to let" that way they won't take any income into consideration they will only be concerned with the letting issue. Have you tried a broker?

This house was bought for £232k and is currently worth no more than that at best, possibly a lot less, by the OP's reckoning. The existing mortgage is £200k with a £7k early exit penalty. So they will need a BTL mortgage of at least £207k, if anyone will do it. Cost, er, £1000 a month. Rent will need to be at least £1250 a month. "Flatmate" will have to come up with £500 a month, so you will be attempting to get £750 pcm minimum in rent for part of the house, which may or may not look like a building site.
Without doing the BTL remortgage, which I don't think is possible anyway, I think that renting could be one way to help. Could you rent out a room and subsidise the mortgage that way? Or is this a non-starter?