One party wants to leave the Tenants in Common Property

paul_hants

Hi there,

I've been advised this ML site may be a good one for this...:cool:

The query goes:
Three friends brought in 3 bed house in the summer of 2007 at the property peak with a tenants in common ownership deal.

Now in March 2011 one of the 3 is insistent on getting out of the ownership. This isn't necessarily to go onto buy another place though, this is simply to cut ties with the house, effectively giving their share to the other two.

The 2 remaining friends have been told by the mortgage company they won't allow it as the house is in negative equity still. The 2 remaining TICs incomes/feasibilities will not be enough to compensate losing the thirds official income.

If it happened the 2 remaining, well all three, would lose everything they've put into the house (including renovations).

The question is: Can 1 of the 3 TICs FORCE themselves out of the deal without the other two legally agreeing to it? :cool:

Can anyone help?

Big thanks in advance for any ideas on the situation.

Paul

kingstreet

If the lender will not agree, I can't see any way out of this.

Despite this being TIC, joint and several liability still applies AFAIK, so the one leaving will still be responsible for 100% of the mortgage payment if the other two are unable/won't pay.

If it's in NegEq, I'm not surprised number three wants out. It's the only way to limit liability, but that's at the expense of the other two.

paul_hants

Thanks for that KS.

I'm just unsure if the one wanting to leave can actually FORCE the hand of the other two.

My understanding was though each holds a defined percentage so if the one wanting to leave would have to get rid of their share.

I'm unsure if the one wanting to leave can FORCE their share onto the other two. The worst case scenario in this one I can think of it the person offers to 'give' their share to the bank that gave the mortgage?

Any thoughts on that?

System

I think he may be able to go to court and force a sale.

kingstreet

Can you surrender your share to the lender? Not that I can imagine. Even if he did, he'd still be liable for the whole mortgage, the same as if you are repossessed.

I can't see how a one third shareholder can force the others to do anything. Not without massive court costs anyway.

Even if he gives away his share, he can't give away the liability that goes with it - liability for the mortgage payments and liability for the amount by which the mortgage exceeds the sale value, if it was sold.

paul_hants

The house have been valued at 2k less than what it was brought for. That said that's the asking price according to the estate agent. So with comparisons to other sales I've seen, typically 5-10k has been knocked off the asking price. Therefore actual price may end up being 7-12k less than what it was brought for, wiping out most of the initial 5% deposit that had been paid.

My understanding was that all three brought the place, a third each, therefore all three would have to sign the paperwork for any changes to how the property was owned (or sold).

kingstreet

paul_hants wrote: »

My understanding was that all three brought the place, a third each, therefore all three would have to sign the paperwork for any changes to how the property was owned (or sold).

That's correct. There could be a potential legal solution but this would only force the property onto the market for sale. Given what you said about the value/debt, I don't know what the one who wants out would achieve?

paul_hants

Thanks for the words. The person wanting to leave is only wanting to cut ties with the place so they can then do whatever they want with their life.

One possible option could be them wanting to buy a place with their partner...this hasn't been confirmed but suspected.

kingstreet

paul_hants wrote: »

One possible option could be them wanting to buy a place with their partner...this hasn't been confirmed but suspected.

Okay.

Chances are new lender will take current mortgage into account, possibly treating like a credit agreement, so if income is ok may still be able to buy with partner. Risk - if other owners don't pay, arrears cause problems with new mortgage application. Will need a deposit of course.

Angela_D_3

So basically the person bought with his friends expecting a share of the goodies and now it's in negative equity they'd like to be released from their responsibilities is that the jist.

Talk about throwing the toys out of the pram, the friend signed on the dotted line, i'm sure if it had increased by £30k they'd have insisted on their share, they need to grow up.

Richard_Webster

Yes, there is no easy solution at all here. if the other two won't agree and the lender won't agree then the person who wants out is stuck.

I assume the three of them thought about what they would do if one wanted out and there was negative equity before they went in to it - they did, didn't they?

I may be wrong, but far too many people buy together without thinking very clearly about what they would do in these kinds of situations, and understanding how they could find themselves trapped, at least until property prices rise and the incomes of the other rise to enable them to buy out the third one, if that's what they want to do..