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Secured Loan not Discharged by Solicitor on Sale of House
dicky-dicko-2009
Posts: 10 Forumite
Hi All,
First time on here but I need advice if anyone can help.
In April 2007 I swapped houses with my in-laws, we did everything through solicitors, full conveyance etc. We had an additional secured loan on the property through the main lender, which we notified the solicitor about so that it could be transferred to the new property. In October 2007 I get a letter from the Solicitor, telling me they are unable to register my in-laws interest as we still had a charge on the property. As far as I was aware this had been transferred, as I was still making my payments as normal on this secured loan. I called the lender to ask why it had not been transferred, and they told me no request had been made, I therefore asked them then to arrange the transfer. They finally came back a couple of weeks later and tell me that their lending criteria has now changed, and we don't meet their criteria anymore so they will not transfer, despite me having more equity now than when I first took out the loan with them. I take legal advice provided as part of my banking service, and they tell me that the solicitor has been negligent in completing the sale without transferring or discharging all charges. I go back to the solicitor who did the conveyance and explain the situation, at no point have they informed my in-laws that there is an existing charge (ours) on their property, and that their interest has not been registered yet. The solicitors try denying that we informed them of the charge, to which I insist we did, and I tell them it doesn't matter as they should have noticed the charge during the conveyance. It turns out that a junior solicitor was dealing with my in-laws purchase; both parties are being represented by the same firm. This argument goes on for a while and I take further legal advice, and they suggest that the firm was negligent and that I and my in-laws should push for the firm to have the charge removed, via their professional indemnity insurance, again the firm has not been in touch with my in-laws to tell them their predicament. The firm claim on their professional indemnity insurance via their insurers (admit of guilt) and the insurers now try to find a solution. Their solution is to try and transfer what they can to our new property, and they take on assignment of the rest, the lender declines this option. The secured loan has a large 5 year PPI agreement which is paid back in full after 5 years if not claimed against, the lender makes money on interest of PPI I assume. I tell the insurers that I am not at fault here and that I will not be out of pocket, and that if they take on assignment the same terms of agreement must be kept, they say we will not be out of pocket. I continually ask for next 6 months what the terms are going to be and hear nothing, until May 2008 when my in-laws receive a letter stating that there interest has been registered, and I receive a letter from my lender saying the loan has been paid in full. I ask the insurer what is happening and get a response only that the loan has been paid in full and that my charge has been removed, this is on the 19th May 2008. Six months go past and nothing heard credit crunch hits etc. times are now hard even though I no longer have to pay for this secured loan anymore. 364 days have now passed since confirmation of loan being settled and I get a letter from the solicitor who mucked everything thing up, on behalf of their client their insurer, for full payment of the settled amount. Which is higher than the amount borrowed plus PPI despite the fact £21,000 in payments had been made by us. I state I was led to believe the matter had been dealt with by their insurer and had heard nothing for 364 days on the matter, and that I no longer have the ability to pay this amount, as with the reduction in house prices I had lost most of my equity, and that with the credit crunch I could no longer pay even if I thought I should. I have received no copy of the deed of assignment, no breakdown of how their settlement figure was arrived at or an explanation as to why I am led to believe all is sorted, to then get a demand 364 days later. I also stated that I will not deal with this solicitor as they caused all the problems in the first place and that it is immoral for them to be used by their insurer to claim for the mistake made by them. Another solicitor is appointed by the insurer who is now threatening court action unless I offer terms of payment. I have asked for the deed of assignment, breakdown on how settlement figure was reached, and an explanation as to why I was not consulted through the process, before they settled the loan. And why now 364 days later they chase me for this money. I have also stated that it is not down to me to have suggested terms of payment and that this should have been agreed, and a new term of agreement be set up with then before settlement was made. I currently do not have the funds to hire a solicitor, so am asking for help here as to where I stand legally. Any help will be greatly appreciated.
First time on here but I need advice if anyone can help.
In April 2007 I swapped houses with my in-laws, we did everything through solicitors, full conveyance etc. We had an additional secured loan on the property through the main lender, which we notified the solicitor about so that it could be transferred to the new property. In October 2007 I get a letter from the Solicitor, telling me they are unable to register my in-laws interest as we still had a charge on the property. As far as I was aware this had been transferred, as I was still making my payments as normal on this secured loan. I called the lender to ask why it had not been transferred, and they told me no request had been made, I therefore asked them then to arrange the transfer. They finally came back a couple of weeks later and tell me that their lending criteria has now changed, and we don't meet their criteria anymore so they will not transfer, despite me having more equity now than when I first took out the loan with them. I take legal advice provided as part of my banking service, and they tell me that the solicitor has been negligent in completing the sale without transferring or discharging all charges. I go back to the solicitor who did the conveyance and explain the situation, at no point have they informed my in-laws that there is an existing charge (ours) on their property, and that their interest has not been registered yet. The solicitors try denying that we informed them of the charge, to which I insist we did, and I tell them it doesn't matter as they should have noticed the charge during the conveyance. It turns out that a junior solicitor was dealing with my in-laws purchase; both parties are being represented by the same firm. This argument goes on for a while and I take further legal advice, and they suggest that the firm was negligent and that I and my in-laws should push for the firm to have the charge removed, via their professional indemnity insurance, again the firm has not been in touch with my in-laws to tell them their predicament. The firm claim on their professional indemnity insurance via their insurers (admit of guilt) and the insurers now try to find a solution. Their solution is to try and transfer what they can to our new property, and they take on assignment of the rest, the lender declines this option. The secured loan has a large 5 year PPI agreement which is paid back in full after 5 years if not claimed against, the lender makes money on interest of PPI I assume. I tell the insurers that I am not at fault here and that I will not be out of pocket, and that if they take on assignment the same terms of agreement must be kept, they say we will not be out of pocket. I continually ask for next 6 months what the terms are going to be and hear nothing, until May 2008 when my in-laws receive a letter stating that there interest has been registered, and I receive a letter from my lender saying the loan has been paid in full. I ask the insurer what is happening and get a response only that the loan has been paid in full and that my charge has been removed, this is on the 19th May 2008. Six months go past and nothing heard credit crunch hits etc. times are now hard even though I no longer have to pay for this secured loan anymore. 364 days have now passed since confirmation of loan being settled and I get a letter from the solicitor who mucked everything thing up, on behalf of their client their insurer, for full payment of the settled amount. Which is higher than the amount borrowed plus PPI despite the fact £21,000 in payments had been made by us. I state I was led to believe the matter had been dealt with by their insurer and had heard nothing for 364 days on the matter, and that I no longer have the ability to pay this amount, as with the reduction in house prices I had lost most of my equity, and that with the credit crunch I could no longer pay even if I thought I should. I have received no copy of the deed of assignment, no breakdown of how their settlement figure was arrived at or an explanation as to why I am led to believe all is sorted, to then get a demand 364 days later. I also stated that I will not deal with this solicitor as they caused all the problems in the first place and that it is immoral for them to be used by their insurer to claim for the mistake made by them. Another solicitor is appointed by the insurer who is now threatening court action unless I offer terms of payment. I have asked for the deed of assignment, breakdown on how settlement figure was reached, and an explanation as to why I was not consulted through the process, before they settled the loan. And why now 364 days later they chase me for this money. I have also stated that it is not down to me to have suggested terms of payment and that this should have been agreed, and a new term of agreement be set up with then before settlement was made. I currently do not have the funds to hire a solicitor, so am asking for help here as to where I stand legally. Any help will be greatly appreciated.
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Comments
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It is clear to me that the insurers only cleared the loan to deal with the negligence issue. Yes, you should have been consulted. But No, this does not excuse you from your responsibilities to pay the loan.
You should have kept the payments aside so you can come up to date with the payments now, but as you were not consulted or informed, that may be water under the bridge. You now need to amke payments on the original terms and the insurer needs to fulfill the original lenders responsibilities and pay you back the PPI when it is due.
You are right to insist on this, but you should indicate that provided it is all in order, you will pay according to the original terms.I have asked for the deed of assignment, breakdown on how settlement figure was reached, and an explanation as to why I was not consulted through the process, before they settled the loan.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
DVardysShadow wrote: »It is clear to me that the insurers only cleared the loan to deal with the negligence issue. Yes, you should have been consulted. But No, this does not excuse you from your responsibilities to pay the loan.
You should have kept the payments aside so you can come up to date with the payments now, but as you were not consulted or informed, that may be water under the bridge. You now need to amke payments on the original terms and the insurer needs to fulfill the original lenders responsibilities and pay you back the PPI when it is due.
You are right to insist on this, but you should indicate that provided it is all in order, you will pay according to the original terms.
Agree with your comments.
The issue regarding neligance is between the Solicitors insurer and the lender of the loan only. In order to remove the charge on the property the loan had to be repaid in full. There was no need for the OP to be consulted on this point.
The insurer is now seeking remedy for the financial loss it has suffered. As the debt itself is the responsibility of the OP.0 -
So your in-laws problems are sorted. That is one good sign.
Now you have the insurers chasing you for a debt that was secured and now isn't. First thing I would do is ring the Land Registry for advice. You want to prevent anyone putting a charge on your property. Tell LR you are having problems with a disputed loan and you are worried that the lender will try and force a charge on your property without your agreement. There is a flag they can put on your file to prevent this, or at least notify you.
Then you need to negotiate a settlement with the insurers. Morally the debt is yours and you should be making the payments as in the original agreement. There is some negotiating power here as (a) the loan is no longer secured on the property and (b) you are not in a position to pay. Bear in mind also that some deal will have been done behind the scenes and chances are the insurers have settled with the original loan company for less than the sum total of your payments. Remember that the insurers make their money from the premiums they charge, which are set at a level to be profitable allowing for expected claims. Any money the insurers get from you is a bonus from them. I would start negotiating from a low position. If you genuinely have little equity in your property and no other big assets, then tell the insurers this. Tell them you will consider bankruptcy if they keep pursueing you (at which point the debt would be written off).I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
So your in-laws problems are sorted. That is one good sign.
Now you have the insurers chasing you for a debt that was secured and now isn't. First thing I would do is ring the Land Registry for advice. You want to prevent anyone putting a charge on your property. Tell LR you are having problems with a disputed loan and you are worried that the lender will try and force a charge on your property without your agreement. There is a flag they can put on your file to prevent this, or at least notify you.
Then you need to negotiate a settlement with the insurers. Morally the debt is yours and you should be making the payments as in the original agreement. There is some negotiating power here as (a) the loan is no longer secured on the property and (b) you are not in a position to pay. Bear in mind also that some deal will have been done behind the scenes and chances are the insurers have settled with the original loan company for less than the sum total of your payments. Remember that the insurers make their money from the premiums they charge, which are set at a level to be profitable allowing for expected claims. Any money the insurers get from you is a bonus from them. I would start negotiating from a low position. If you genuinely have little equity in your property and no other big assets, then tell the insurers this. Tell them you will consider bankruptcy if they keep pursueing you (at which point the debt would be written off).
Taking a legal rather moral stance. The insurer is within their rights to recover the debt. The OP has received remedy for their complaint. Which resulted in the insurer being forced to take a certain course of action.0 -
There are two separate cases:
In-laws no house has a charge belonging to someone else on it.
The in-laws conveyancing solicitors were at fault for not ensuring the charge is removed.
The in-laws solicitors negligence insurers have paid for the removal of the charge.
These insurers are now looking to recover the money; I guess they have sold the debt to someone else.
Now look from OPs POV.
They asked the lender to transfer the charge to the new property. Lender refused.
They ask the lender to transfer some of the debt to the new property and have remainder unassigned. Lender refused.
in-laws solicitors' negligence insurers request a lump sum payment.
I don't know the relationship between the lender and in-laws solicitors' negligence insurers, but it seems that OP would have accepted the loan charge onto the new property, but the lender decided they would do better by refusing this and demanding full payment which they now have due to solicitors' negligence. So the lender has seen a root to a quick repayment of the whole loan. This has prevented OP claiming on their PPI, which could possibly have made payments for them. So OP has lost out by the negligence of the in-laws solicitors and so it seems a bit rich that in-laws solicitors insurance can demand repayment for a negligence that they should be covering.I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Good point... Now you have the insurers chasing you for a debt that was secured and now isn't. First thing I would do is ring the Land Registry for advice. You want to prevent anyone putting a charge on your property. Tell LR you are having problems with a disputed loan and you are worried that the lender will try and force a charge on your property without your agreement. There is a flag they can put on your file to prevent this, or at least notify you.
The important point here to me is that the insurer may well have settled at a discount - and I would step back a little from what I said earlier - perhaps OP should only be paying back what it cost the insurer to settle?... Then you need to negotiate a settlement with the insurers. Morally the debt is yours and you should be making the payments as in the original agreement. There is some negotiating power here as (a) the loan is no longer secured on the property and (b) you are not in a position to pay. Bear in mind also that some deal will have been done behind the scenes and chances are the insurers have settled with the original loan company for less than the sum total of your payments.
Insurer's action has resulted in the loan being settled without consultation - and the Insurer now claiming to be the creditor. But this interferes with any benefit the OP may have had from being with the original lender - in terms of the debt being placed with a DCA and the option of making a reduced Full & Final settlement. I also wonder whether the OP would have been able to claim on his PPI . On the other hand, the OP has had the benefit of the property transaction going through, when it looks like the lender would have prevented it if they had been given the chance,Thrugelmir wrote: »Taking a legal rather moral stance. The insurer is within their rights to recover the debt. The OP has received remedy for their complaint. Which resulted in the insurer being forced to take a certain course of action.
Overall, I am convinced that the OP should at least be put back into his original position and maybe if the insurer settled more cheaply, he should get the benefit of their settlement. But so much has happened that I don't see an easy way of unravelling this.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Agree with your whole post and particularly the above. [Except that OP is better off by not having had to pay for loan]I don't know the relationship between the lender and in-laws solicitors' negligence insurers, but it seems that OP would have accepted the loan charge onto the new property, but the lender decided they would do better by refusing this and demanding full payment which they now have due to solicitors' negligence. So the lender has seen a root to a quick repayment of the whole loan. This has prevented OP claiming on their PPI, which could possibly have made payments for them. So OP has lost out by the negligence of the in-laws solicitors and so it seems a bit rich that in-laws solicitors insurance can demand repayment for a negligence that they should be covering.
OP now needs legal advice which he would not have needed but for solicitors error.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Fair enough not to consult, provided it had no implications for OPThrugelmir wrote: »Agree with your comments.
The issue regarding neligance is between the Solicitors insurer and the lender of the loan only. In order to remove the charge on the property the loan had to be repaid in full. There was no need for the OP to be consulted on this point.
But now insurer is chasing, it plainly has implications for OP and the whole process is defective for no consultation.Thrugelmir wrote: »The insurer is now seeking remedy for the financial loss it has suffered. As the debt itself is the responsibility of the OP.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
DVardysShadow wrote: »But now insurer is chasing, it plainly has implications for OP and the whole process is defective for no consultation.
The OP was aware that the lender was unwilling to release the charge without settlement. Continuing to repay the loan after leaving the property. So knew that the liability existed.
The insurer is looking after the interests of the new purchaser of the property, to correct the situation. The fact that the loan was settled in order to remedy the situation is a secondary issue.
The OP should be able to recover there legal costs incurred in making good the situation, which may provide some offset.0 -
It is now the primary issue. The insurer has meddled in a contract to which it is not a party - as your correctly say, to look after the interests of the new purchaser. It is now trying to enforce dubious rights against the OPThrugelmir wrote: »The OP was aware that the lender was unwilling to release the charge without settlement. Continuing to repay the loan after leaving the property. So knew that the liability existed.
The insurer is looking after the interests of the new purchaser of the property, to correct the situation. The fact that the loan was settled in order to remedy the situation is a secondary issue.
OP may not be in a position to take the risk of incurring legal costs. The more I look at this, the more I agree with silvercar - insurer has paid less than full whack to clear the loan and is now seeking to make a profit out of OP. OP should have been consulted - should have been given his own legal advice at insurer's expense.Thrugelmir wrote: »The OP should be able to recover there legal costs incurred in making good the situation, which may provide some offset.Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0
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