barred from selling house

forumman_2

I am in negative equity because of secured loans. Is it true that I cannot sell my home without permission from the lenders? My master plan was to allow the secured debt to become unsecured and then to add it to an IVA! I hope someone can tell me differently

A_Nice_Englishman

A loan secured on a property means the lender has a right to their share when it's sold, amd can force you to sell in some circumstances.

I doubt if your creditors could STOP you selling your home but they would take all the proceeds as you're in negative equity.

forumman_2

That's what I thought but if you google it you get the negative response- eg shelter's website. Love to get confirmation one way or the other from someone who has been in this situation

A_Nice_Englishman

Hmmm interesting!

Shelter obviously know about these things so I'm sure they're right. Can't speak from personal experience though.

lynzpower

i do believe it not to be possible to move secured to unsecured. If you sell your place & you are in neg eq, then the lenders wil keep what they have got, then you will owe anyshortfall, unsecured obv as you wont have a house, is this what you mean?

forumman_2

yes secured debt becomes unsecured once the property is out of the equation, that bit is obvious. My question is whether I will be prevented from selling? If not I can add the shortfall to an IVA, hopefully.

Tootsie_Roll

forumman wrote:

yes secured debt becomes unsecured once the property is out of the equation, that bit is obvious. My question is whether I will be prevented from selling? If not I can add the shortfall to an IVA, hopefully.

Unforunately they can stop you from selling the house. You will need to give clear title to the purchaser and unless all charges are cleared you cannot do this. This was very common in the early 90's and really is a catch 22 situation for people who cannot afford to pay thier mortgages anymore.

mystic_trev

You'll be wating more of money that you haven't got, and also end up annoying your potential buyer and their solicitor - not to mention your own! solicitor as well!!!!

libitina_2

Would that not be fraud?

fatbelly

From National Debtline:

You may be able to sell your house with permission from your lender. You will need their agreement as they can stop a sale going through if the sale price will not cover the outstanding mortgage. You will need to persuade them that you have obtained the best possible price for the property. Point out that if the house was sold by your lender they would be likely to get a much lower price as the property would be empty and could fall into disrepair.

The Mortgage Conduct of Business Rules say that a lender must “deal fairly” with anyone in arrears. It also says the lender must: “give consideration to the customer being allowed to remain in possession to effect a sale”. This means that if you cannot afford to stay in the house, the lender must look seriously at allowing you to sell the house yourself whilst you are still living there.

If your lender refuses to let you sell the house it is possible to apply to the county court for an order for sale under the Trusts of Land & Appointment of Trustees Act 1996. The court can order a sale on whatever terms it thinks are reasonable, even if your lender objects.

In some circumstances you can use Palk v Mortgage Services which is a case where the lender was ordered to sell the property after repossession rather than rent it out indefinitely. This was because the rent would not have covered the interest being added to the mortgage so the debt was still growing.

In the Halifax v Barrett case the court let the borrowers sell their house for the “best possible price” even though the Halifax refused permission for the sale. The borrowers were also allowed to take the sale costs out of the sale proceeds before the money went to the lender.

Talk to your lender about selling your home yourself.

You may have to prove to your lender that sale is the last resort and the sale is in everyone’s financial interest.

Provide your lender with full information about your financial circumstances.
You will need evidence from several independent estate agents that you have found the best sale price for your home.

The lender may ask you to sign an extra agreement saying how you will repay the shortfall debt.

Consider handing the keys in and making an arrangement to clear the shortfall once the house is sold by your lender. This is only an option if you do not want a new mortgage in the near future as your details will be on the Mortgage Possession s Register for six years.

You will also have a problem with being rehoused by the council as they could treat you as having made yourself homeless voluntarily.

Make sure you keep any valuations from estate agents and keep adverts for sale of similar properties in your area in case there is a dispute in the future over the price for which the lender sold the property.

You will still be liable for the regular mortgage payments until the house is sold. You will also be liable for interest charges, costs for estate agents, legal fees, repairs and insuring the building.

You need to think very carefully about the options before handing your keys back. Before making a decision

You can phone National Debtline for advice on 0808 808 4000

gravitytolls

Fatbelly is quite rihgt. The local council will not house you, if you sell, as you will have made yourself intentionally homeless.

If you are going to need housing, you woudl have to repossessed, then they would help you.