Issues with late grandparents' house

yummymummy79

Apologies in advance for this turning into a ranty essay, but there's a lot of angles to this and I need views of outsiders if possible.

My late grandparents put their house into the name of my mum and auntie with the proviso that when they died, it would be sold and split 5 ways between my mum, auntie, me and my 2 cousins. There was initially no mortgage, but over the years we agreed that we could borrow money against the house if we needed it as long as we paid the interest for the loan which would have to be taken out. This was fine, I had £8k towards deposit for my first house, and later £5k for a car so borrowed £13k and was paying my share of the interest (my parents contributed a bit towards this interest to help me out). My mum never borrowed any money, we knew that the other 3 did but never knew how much. We kind of had an understanding that we'd limit the borrowing to £15k each so that there would be enough equity left when the time came to sell and we'd all get a bit extra.

Fast forward to last year when my grandad died and everything needed sorting out. I can't exactly remember in which order everything happened but basically me and my parents found out that:

My auntie and cousins had borrowed £19k each, which with my £13k made a mortgage on the house of £70k, we didn't know how much they had borrowed up until now.

The interest payments we thought had been going direct to the bank had actually been going to my auntie for her to then pay the bank. This had been OK in the early days, but it seems she has missed payments in the last few months thereby building up arrears.

We have never seen any paperwork to do with the mortgage, it all went to my grandad's house and 1 cousin had been staying there (we knew this) so had been getting it before my mum got a chance.

On top of everything to do with the mortgage, my parents have lent my auntie and cousin at least £15k to get them both out of trouble (car breakdowns, fines from various people etc). My cousin has allegedly been on the brink of going back to prison for various things if fines weren't paid, so my parents bailed him out at least twice. personally I am very dubious of the details of these fines and don't believe them, along with not believing numerous excuses that pop up giving reason for them not being able to pay the money back.

Another thing that gets my goat (although irrelevant really!) is that when I was growing up, my parents had very little money, we only had caravan holidays in the UK, secondhand clothes and electricals were all that we could afford and we basically struggled through. At the same time, my auntie had a big 4 bedroom house, was a bank manager, had a nice car and always bought big expensive presents and basically showed off all the time with how well off she was, not at any time offering (AFAIK anyway) to help mum and dad out with anything at all. Now my parents are comfortable (due to inheritance from dad's side of family), and she's got herself sacked from jobs and living in a council bungalow, she didn't hesitate in asking them for thousands, as well as little bits now and again like cheap banger cars etc. Grrrrrrrrrrrrrrrr!

None of this money lending has been recorded in writing so my fear is that my auntie and/or cousin will go bankrupt leaving my parents stuffed for getting anything back (other cousin is already bankrupt and auntie was sacked from being a bank manager for fiddling so not a great history with money!)

So we are looking at a £70k mortgage on the house at present, including some arrears that we still don't know the details of. Had an estate agent round to value it, he thought we'd be looking at somewhere around £80k if we were lucky, taking into account the 'old people' style and decoration and the fact that the bathroom is off bedroom 1. Had a builder round to have a look and he initially offered £76k which we agreed to go with as it would be easier than going through the full estate agent procedure and there would be a bit of money left for my mum out of the proceeds.

yesterday my dad tells me that the builder had a mate do an informal survey and has found a big problem in the attic, something to do with a missing chimney which would cost £5-7k to put right, so he's obviously going to reduce his offer. (this problem has been there for at least 50 years and the house hasn't collapsed yet but hey ho!)

So we're in a bit of a quandry as to what to do and what our best options are. We could get the builder to give a revised offer but this could work out leaving negative equity. My auntie has said she will pay any difference as her side of the family had more money, but tbh i can't see this happening as she hasn't got any money to spare to do this. She has said the bank will let her pay any neg eq monthly but i can't see this being true, especially with what happens with deeds etc? Anyone know if this is likely?

Or the other option could be to get some quotes to get the work done ourselves potentially a bit cheaper, then sell it on the general market, maybe to 'normal' buyers who may be willing to pay more than a builder. My parents just want to get rid though so are not keen on this idea, neither am I but I don't want them to lose out any more than they have already.

So basically, a few questions I have:

1. Am I justified in being very peeved at the sheer greed and selfishness of my family for taking more money than they were entitled to, as well as borrowing on top of this from my parents, not paying it back and generally being very underhand about the whole thing?

2. is there anything we could do about this? I'm thinking get something in writing retrospectively about the loan so at least they may be covered in the event of bankruptcy etc?

3. What do people think is our best option for selling?

4. Is there any chance that the bank would let any negative equity be paid back monthly or is this yet another tactic to stall/mislead?

5. Is there anything I've missed that could help us out?

Thanks for reading, this has been upsetting and angering me for some time now, and I'm just glad that my grandparents never got to find out about it as they would be incredibly disappointed.

Jowo_2

Consider getting a proper survey done independently to verify that there is indeed a major building defect that warrants the discount that the builder is negotiating rather than relying on what his mate says.

Consider selling it at auction - find out how this works. Maybe that builder won't be so severe at negotiating a reduction if he knows he'll face competition from other parties which could drive up the price. Use the prospect of selling it on the open market or putting it up for auction as a negotiating tactic if you'd quite like the simplicity of the builder taking it off your hands but want some leverage on the purchase price.

Ask your aunty to supply a current statement of the accounts with the lender. You have absolutely no real idea of the finances on it, do you? You need up to date black and white information, not hearsay from an aunty with a history of fiddling...

Speak to a solicitor about the situation to find a legal remedy and gain an understanding of options and liabilities.

yummymummy79

Thanks, they are certainly viable options to consider. The initial builder was just someone we knew so were hoping to get it sorted with minimal effort but looks like we might have to do it other ways.

I have been at my mum for months to get paperwork for the house so we know what we are doing, but she doesn't want to upset her by having to ask as it'll seem that she doesn't trust her. I don't really want to have to talk to her if i can help it as i'll just end up getting really angry and upset, but it looks like i might have to now. I'm hoping my dad might be a reasonable middle ground instead!

tyllwyd

yummymummy79 wrote: »

... 1. Am I justified in being very peeved at the sheer greed and selfishness of my family for taking more money than they were entitled to, as well as borrowing on top of this from my parents, not paying it back and generally being very underhand about the whole thing? ...

Yes, you are but in the end you will have to let that side of it go, or else it will just end up eating away at you and making you miserable.

What worries me is that you don't seem to have the full story of all the money borrowed against the house. I think you need to have all the facts before you can make a sensible decision whether to sell and what price to sell at. Your mum & auntie are the joint house owners, so I think she needs to ask her sister to have a meeting where they both bring all the paperwork about anything to do with the house, and can be honest with each other about the situation.

I don't quite understand how your auntie proposes to pay off negative equity to the bank - if there are secured loans they need to be paid when the property is sold. I might just be scaremongering, but your mum needs to be sure that when the property is sold that the loans are paid off or are in your aunt's name only - the last thing she needs is for the bank to start chasing her for any unpaid amount.

It does sound as if the builder is trying to squeeze a bit of money off, but you have to balance that against estate agents fees and the fact that houses are not exactly selling quickly at the moment, so you might end up waiting six months for a buyer and then having exactly the same situation when the survey comes back. Is the house sitting empty at the moment?

Jowo_2

Are these secured loans against the property or a mortgage? During the conveyancing process, the solicitor will expect to receive information about all liabilities and lending on the property.

You could also check the land registry to see if there are any charges on the property from creditors by paying £4 to download the ownership details from the Land Registry website (if in England/Wales) or Registers Scotland (Scotland). I don't know how much information this report will display, though, it won't give the mortgage sum or arrears on it, I think.

You will need a solicitor to help with conveyancing so I suggest you get one, letting them know about multiple ownership and potential negative equity. Let your Aunty know that you are appointing a solicitor and that you'll need to call round shortly to fetch the details of the mortgage and loans on it for the sellers information that will need to be provided. This way you are merely making clear that you liaising with the solicitors and need to provide him with all the standard upfront information - you don't need to get into any kind of argument at all - you are simply collecting basic information which you need now to get the ball rolling. The relationship issues and family problems you must put aside - this is an administrative task to collect the financial paperwork from her, not an inquisition. Any delays to the provision of this basic information will stall the sale to the builder.

clutton_2

""don't really want to have to talk to her if i can help it "" - someone has to otherwise it will never get sorted out.. why not call one big family meeting with EVERYone there so that there can be no manipulating behind each others backs...

i any case, it sounds like you wont get any more funds.... once closing fees are taken into account... so why get all het up if you are not going to profit from the sale - ok its not fair.. life isn't ?

Jowo_2

On the communication issues you've alluded to, all that's happened when people stopped taking ownership is that it was made easier in the information vacuum for your other relatives to take advantage of the situation. Your self-imposed ignorance (including your folks) means the others thrived on it. If there are more loans or a higher mortgage or higher arrears than has been reluctantly revealed, the chances are that your relatives will try to sabotage the sale to cover this up. This actually means you require to step up even more, be even more tenacious and diplomatic and have a strategy that can accommodate the worse case scenario of massive liabilities that fall jointly on your side of the family caused by the others. Now is not the time to back off.

yummymummy79

Thanks all for your input. yes I realise that a lot of this has been based on trust for a long time, but then my mum wouldn't think that her sister would do anything underhand so it seemed reasonable in the outset. I agree (and have said for a few months) that the trust has run out so we need to work on facts now, so the idea of a big family meeting including all paperwork is going to have to be the next step i think. Trouble is, I live 3 hours away so it's not as if I can just pop over (which is why I haven't been so involved up to now), but i'll def arrange something to go and sort it out cos we're certainly at that stage now.

I've been saying that we need to make sure that the estate agent contract needs to be in both names as well to make sure that my auntie can't just do whatever she wants, but its like talking to a brick wall tbh, my mum doesn't like or want conflict so she's just leaving her to it. I think that stems from my auntie always being seen as the successful, clever, wonderful one so my mum lacks confidence in dealing with her. Even though the complete reverse is true!

Mum is in hospital having a knee op today, so I'll try and arrange something for when she's sorted. Have got my auntie's address so think I'll write and ask for copies of paperwork in the meantime so I can see whats going on.

Jowo_2

To be honest, I can't see the point of a big family meeting as this could easily tip over into a blame game or be dominated by those with an agenda (such as concealing the extent of their borrowings against the property and wiping out the equity for others). I think it would be difficult to control this meeting unless you had specific objectives, such as the signing of documents and handover of paperwork or specific decisions to be made, and could ensure that it just stuck to them.

It does need a central point of coordination though, which by the sounds of it, should be you because of your parent's timidity.

Perhaps one way to get a more neutral or controlled environment, would be to pre-arrange it with a solicitor so all parties could sign the terms and conditions of the solicitor's agreement to act for them and accept their quote, complete the sellers information pack and bring all the necessary documentation, such as the mortgage/loans, any buildings compliance certificates or warranties, deeds, energy/telecoms/broadband/cable or satellite providers, proof of ID and so forth. You could pre-brief the solicitor on the background as to why you want it to take place in their office and get them to communicate in writing in advance to your aunty and cousin all the documents they must bring to kick off the conveyancing.

Then it would become clear if they lack the will to see it through because they are afraid of the transparency it will bring to their previously hidden actions if they come up with excuses why they can't attend or why they can't forward the necessary information.

Remember that a potential purchaser, such as that builder, isn't necessarily going to stick round for months if his solicitor advises him that the conveyancing process is being frustrated by the sellers.