Cousin wants a charge over my property

DVardysShadow

jakeyboyne wrote: »

... Basically, my cousin lend me some cash last year, to purchase a house, with the agreement I would mortgage it in about 6 - 7 months to repay her. At the time it was when banks froze lending and house prices reduced a little.

Long story short, loan amount £100,000 .... nothing written on paper about loan length.

Since I've been in the property I've tried getting a mortgage and I've been refused every time, I've learnt this is due to something remaining on my credit file from a few years ago - but never the less it stops me getting approved.

I explained this to my cousin and told her since I was having trouble getting a mortgage I will put the house in the market and sell the property to return her money.

The property's been on the market for about 5 months now, and I've had 2 viewings, 1 offer. Which my cousin told me to reject (Offer of £95,000)

I seen her today at a family lunch and she turned a little nasty saying she was going to see a solicitor and I will be getting a letter from them.

My question is, what (if anything) can a solicitor do - far short of asking me to sell to return the funds, but its already on the market. The deeds to the house are solely in my name. Can she demand ownership? ...

Effectively, she does own it, but not legally. You have a responsibility to your cousin for £100k and she is prbbaly not being unreasonable in insisting you don't sell for 95k. You should do 1 of 2 things

• sign the house over to her and pay her rent for the house
• let her have a charge on the house for 100k and pay her interest on the money

dopester

DVardysShadow wrote: »

Effectively, she does own it, but not legally. You have a responsibility to your cousin for £100k and she is prbbaly not being unreasonable in insisting you don't sell for 95k. You should do 1 of 2 things

• sign the house over to her and pay her rent for the house
• let her have a charge on the house for 100k and pay her interest on the money

If the OP was encouraged into this deal by the reckless lending cousin holding a very positive outlook for the property market, or even if it was a bit of both - I'd be very cautious about the lending cousin having a £100K charge on the house.

Would that not plunge the OP into instant negative equity? (Best current offer £95K - fees, assuming it wouldn't fall through). It might have been the cousin who was the bullish one about buying it and so the cousin should be sharing in some of the loss in value. The cousin was happy to front the money without paperwork.

The signing it over to the cousin who fronted the purchase money isn't a bad compromise. The OP could also move out if they can't afford the rent to the cousin. The lending cousin has some real responsibility in creating this mess and should take some brunt of the market changes she did not expect.

Jowo_2

Eton_Rifle wrote: »

Do you ever see good in anyone?

I've no idea of the poster's reputation on the forum.

But by any stretch of the imagination, this was a highly risky, poorly thought out and poorly executed investment, made even worse for breaking the golden rule of 'never a borrower nor a lender be' by mixing personal and business relationships.

It goes to show another golden observation 'A verbal agreement is worth the paper it's written on'...

And I'm a relatively diplomatic poster...

DVardysShadow

dopester wrote: »

If the OP was encouraged into this deal by the reckless lending cousin holding a very positive outlook for the property market, or even if it was a bit of both - I'd be very cautious about the lending cousin having a £100K charge on the house.[1]

Would that not plunge the OP into instant negative equity?[2] (Best current offer £95K - fees, assuming it wouldn't fall through). It might have been the cousin who was the bullish one about buying it and so the cousin should be sharing in some of the loss in value. The cousin was happy to front the money without paperwork.

The signing it over to the cousin who fronted the purchase money isn't a bad compromise. The OP could also move out if they can't afford the rent to the cousin. The lending cousin has some real responsibility in creating this mess and should take some brunt of the market changes she did not expect.

[2] Owner and cousin are already in negative equity!!!!
[1] Foolish cousin is down by £100k. OP is up by 1 house. I see nothing unreasonable about cousin getting a charge on the house. This is not to OP's disadvantage compared to getting a 100% mortgage

As far as I can see, foolish cousin has been a little unreasonable talking about taking it to a solicitor unless she has already asked OP for a charge on the house.

And OP is being irresponsible by not offering his cousin a charge.

Fang_3

Have you paid your cousin any money since she lent you the money? Did you speak of what would happen if you didn't get a 100% mortgage in the middle of the recession? You owe your cousin £100,000 and you agreed to pay it back within 6 or 7 months. You didn't, so you really should be offering to pay her equivalent interest at the very least. You have a home that you pay no rent and no mortgage on and for a year you haven't saved a single penny, due to the generous nature of your cousin. In the words of Judge Judy - PAY UP!

zzzLazyDaisy

There will certainly be a paper trail.

The money laundering laws require a cash purchaser to show where the cash has come from.

In this case either the lending cousin paid the money directly from her bank to OP's solicitor, and would have had to provide documentary evidence of where she got the money from (say a copy of the will if it was an inheritance).

Or the lending cousin put the money into OP's bank account in which case Op would have had to make a statement about where it came from - and that would have to be verified by the lending cousin.

It seems extremely unlikely that the solicitor would not have drawn a loan agreement up.

But at the very least the solicitor would have written to the lending cousin and advised her to seek independent legal advice before continuing (not out of any concern for the lending cousin, but to cover their own back as they could not act on behalf of both parties because of a potential conflict of interests which could get them into trouble with the law society).

Had the lending cousin sought legal advice a notice would have been placed against the deeds.

To be honest the scenario presented by OP is so unlikely that I have to wonder if this is a wind-up.

jakeyboyne

zzzLazyDaisy wrote: »

There will certainly be a paper trail.

The money laundering laws require a cash purchaser to show where the cash has come from.

In this case either the lending cousin paid the money directly from her bank to OP's solicitor, and would have had to provide documentary evidence of where she got the money from (say a copy of the will if it was an inheritance).

Or the lending cousin put the money into OP's bank account in which case Op would have had to make a statement about where it came from - and that would have to be verified by the lending cousin.

It seems extremely unlikely that the solicitor would not have drawn a loan agreement up.

But at the very least the solicitor would have written to the lending cousin and advised her to seek independent legal advice before continuing (not out of any concern for the lending cousin, but to cover their own back as they could not act on behalf of both parties because of a potential conflict of interests which could get them into trouble with the law society).

Had the lending cousin sought legal advice a notice would have been placed against the deeds.

To be honest the scenario presented by OP is so unlikely that I have to wonder if this is a wind-up.

It most certainly isnt a windup!! - I've got better things to do with my time then make up stories!!

My cousin put the money into my account, via chaps payment, and there is sat for approx 2 months until the house completed, upon completion I sent the money to the solicitor.

Solictior didnt ask nor did he care where the money came from. Only thing he asked to see was my passport, as proof of my identity when I was signing the paper to buy the house, at no point was my cousin involved with my solicitor.

All the replies are stating the obvious, yes I know I own the house, yes I know I lent the money off her, Yes I know it hasnt sold, my original question is what can she do if she seeks legal advice? I'm selling as quick as I can to get her money back to her!

Jowo_2

jakeyboyne wrote: »

All the replies are stating the obvious, yes I know I own the house, yes I know I lent the money off her, Yes I know it hasnt sold, my original question is what can she do if she seeks legal advice? I'm selling as quick as I can to get her money back to her!

The market sounds either stagnant in your area, and/or the property is over priced.

Clearly it may have depreciated in value and buyer don't pay what the owners hope to reap to settle a dispute over a loan. She could be in for a long wait and a lower end price if the 95k figure is the best anyone is going to offer.

So are you prepared to persuade her (if there even is a next time) to accept a lower offer and make a repayment schedule to pay back the outstanding sum?

Britwife

I don't understand what you are so worried about. The worst that can happen is that you have to move and then she gets her money back. Find a flat that you CAN afford and then try and save up to purchase a house on your own.

You sound more upset about what she wants to do instead of the fact that you haven't paid her back. You are making her spend more money when you 2 need to sit down and come to an arrangement that won't cost her more money.

To the poster above.....I see good in most people and I trust until given a reason not to trust. Most people are good and this cousin and OP were obviously pretty close and trusted each other. The plan was just not thought out in the best way.

Emmzi

worst thing, she takes you to court, it all goes her way, you have to go bankrupt and are forced to sell the house (which you are doing anyway), your credit file is knackered and the council will not rehome you as you have made yourself intentionally homeless by not giving her money.

is there something else going on here?

Are you worried about a benefits claim or a council flat you still have on the go or something?