Cousin wants a charge over my property

jakeyboyne

Emmzi wrote: »

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?

Excuse me?

What benefits / council flat?? I work a full time job thank you

Jowo_2

jakeyboyne wrote: »

Excuse me?

What benefits / council flat?? I work a full time job thank you

So assuming that you are rent free and moved into the property last year, why do you not have any savings to pay her the shortfall in the amount of the loan and the lower property price?

Or were you paying her back a sum each month until such time that you could take over the mortgage?

jakeyboyne

First off cn I just say I found your comment really quite offensive and somewhat assuming. I pay her and have been for the last year £400 a month in interest. Which is probably slightly over what you would get from a bank per month but that's not the issue, nor is it how much I pay each month, again, I'll recite my question ...... What can you do legally. I'm already selling the house.

silvercar

jakeyboyne wrote: »

First off cn I just say I found your comment really quite offensive and somewhat assuming. I pay her and have been for the last year £400 a month in interest. Which is probably slightly over what you would get from a bank per month but that's not the issue, nor is it how much I pay each month, again, I'll recite my question ...... What can you do legally. I'm already selling the house.

You are paying 4.8% interest; a good rate in today's market.

In answer to your question, your cousin could go to court and get a charging order on the property. This would prevent you selling without the cousin's agreement. Theoretically the cousin could go to court and try and get the court to rule that you should repay, but with no access to that sort of money a lump sum is out of the question. The cousin could ask the court to impose an attachment of earnings order, which would mean an amount decided by the court would be taken by your employer from your pay each month.

The question is whether you want to sell or not. Either:

1) sell up as quickly as you can then pay your cousin the outstanding amount at an agreed amount per month;

2) see a mortgage broker, get the highest mortgage you can and pay that to your cousin. Then agree a repayment schedule for the remainder.

The other question is whether your cousin wants you to sell if you can't release the total £100k. Would your cousin want you to sell for £90k and come to an arrangement for the remaining amount, or would your cousin want you to hold on until the property is worth more? Having lent you the money, the choice of when to sell is yours unless the cousin obtains a charging order.

Jowo_2

You indicated previously an issue, I believe, with your credit record that meant you've been rejected as a mortgage applicant. Is there any likely resolution to this? You may find the Debt Free Wanabee thread can tell you how to challenge and rectify this if that's the main barrier (I don't mean to imply you are in debt, just that that particular forum may have posters with greater knowledge of this). Or the Mortgages and Endowments board.

dopester

DVardysShadow wrote: »

[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.

That is not the way I see it. The owner is not in negative equity. They have a house bought on the back of money lent/given with no formal contract setting out all the terms.

Seems to me the verbal agreement/contract was the OP would mortgage/remortgage it in 7 to 8 months time, to repay the cousin, and that has not proved possible. The OP can't get a mortgage/remortgage. Unless you know something I don't... where are the magical "or else this that and the other" parts of the agreement/contract people are dreaming up?

The OP has poor credit history and can't get a mortgage - either at the time of purchase (I'm presuming, for why did cousin lend the money) or now.

Was there anything in the agreement that laid out what the OP would do if they couldn't get a mortgage/remortgage? Was there anything in the agreement that said the OP had to stump up any loss in value if property sold?

Also didn't lending cousin want some taste of the action? A profit of some kind when HPI returned, and house remortgaged/sold? I'm guessing they did. OP don't feel guilty. The lending cousin has some responsibility here. Not entirely your fault you can't remortgage to repay her and value of property has fallen further.

If this went to court I don't think the OP would be required to repay £100,000 or be in NEGATIVE EQUITY. Some people here need to do some research about lending to family and friends, especially without formal contracts - and the difficulties the lending people have often got themselves into. Best the lending party can get is a settlement, in my opinion - and from cases I've discussed with my Commercial Litigation solicitor relative.

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.

Fang_3

jakeyboyne wrote: »

First off cn I just say I found your comment really quite offensive and somewhat assuming. I pay her and have been for the last year £400 a month in interest. Which is probably slightly over what you would get from a bank per month but that's not the issue, nor is it how much I pay each month, again, I'll recite my question ...... What can you do legally. I'm already selling the house.

She can sue you for the money and you will go bankrupt. You agreed to pay her back within 6 to 7 months. You haven't.

Emmzi

jakeyboyne wrote: »

Excuse me?

What benefits / council flat?? I work a full time job thank you

Well good for you, but no need to take offence! Not everyone is so lucky.

It's difficult to give advice with only half the picture and it seemed a very complicated situation for a working person to have gotten themself into.

DVardysShadow

dopester wrote: »

That is not the way I see it. The owner is not in negative equity. They have a house bought on the back of money lent/given with no formal contract setting out all the terms.

Technically, I suppose if the debt is not secured on the house, then it is not negative equity. Except there is a debt, which OP has admitted here [if not elsewhere], and the OP has assets worth less than the debt. So, the only reason it is not negative equity is that the loan is not secured. So it is just as bad a situation, unless OP is minded to leave foolish cousin in the lurch.

dopester

DVardysShadow wrote: »

Technically, I suppose if the debt is not secured on the house, then it is not negative equity. Except there is a debt, which OP has admitted here [if not elsewhere], and the OP has assets worth less than the debt. So, the only reason it is not negative equity is that the loan is not secured. So it is just as bad a situation, unless OP is minded to leave foolish cousin in the lurch.

If no regular lender would lend the OP £100,000 to buy the house in the first place, and won't let them take £100,000 mortgage now - then don't you think the lending cousin has taken HIGH RISK to lend/transfer £100,000 to the OP, to buy the house - and without any formal written agreement/contract?

The verbal conditions apparently being to pay back some months down the line when the lending cousin presumed lending conditions would have improved, and probably house prices back up. It is not entirely the OP's fault that hasn't proved to be the case.

It isn't as bad as situation because the lending party has taken high risk. Even if they had a formal written contract it would be high risk. With high risk comes the possibility of loss.

How old is the OP? Especially if they are young, naive and inexperienced (18-23) they might have been better off if cousin had not offered to loan them £100K (where no mainstream lender would) to buy a house in their own name, on the condition it is repaid with a remortgage in the future, if they are now to be held firmly to repaying it all.

Sometimes banks turn people down for a loan for both the lenders, and the would-be-borrower's, best interests. After all, we know that the property is now worth less than when they bought it... and they bought it after a substantial fall from peak by the sounds of it.

The lending cousin is looking at a settlement only imo - unless the OP can magic up more money. Signing over the house to the cousin seems a good compromise. The lending cousin provided a loan where no mainstream lender would, and with no formal agreement.