Big Headache with Ex & House Sale........

starrieshillane

All

Im really not sure where to put this.......... apologies if I have posted in the wrong place. I have submitted a request for advice on the Mortgage forum a few months ago ...... it read:

March 2007 - bought house with fiance for 100% mort for £175000 with a £12000 unsecured loan amount to make up the purchase price( both over 30 yrs). Monthly payments were at £1124 but affordable as we both had good incomes etc.....

Jan 2008 - Partner left the relationship and stopped paying Mortgage. Ex Partner disputed all the valuations and basically spend 12 months argueing over the value of the property. It was quickly realised that we were venturing into a negative equity situation. Also at the time there was a £7000 early redemption fee etc.

I made a decision that I'd sooner try and keep the house than to suffer 50% of the debt after sale. Not a decision I took lightly.

Thankfully I was able to rent a room downstairs and keep my head above water re the Mortgage payments. I liaised with my lender (CBS) and learnt that I could remove my ex from the mortgage with my father as a joint applicant. BUT i could not remove my ex from the unsecured loan without clearing it in full:(.

Just to explain it was not viable for me to apply for another loan over a shorter period(4yrs) as the payments would go from £78 (over 30 yrs)to approx £250 per mnth making the house unaffordable for me.

At this time we were looking at a defecit of approx £20000 total.

I offered to remove my ex from the mortgage and to indemnify him by way of contract from the loan. OR if he could assist then we both work towards paying £6000 each to clear the loan.

My ex has flatly refused my offers and last year he threatened me with court to force the sale of the property:(. It does feel very unfair as I have paid the Mortgage since he left 3 yrs ago.

We need £185000 to clear both the mortgage & loan ( inc legal fees & estate agents fees). The house is on the Market for £175000 (valued at £172000). I have now received another solicitors letter that my ex wants the house sold at any cost and I am to take the advice of the estate agent and drop the price to £165000! leaving approx £10000 each debt.

I know this sounds bonkers, I dont understand my ex's motives but its a frightening situation to be in.

UPDATE

Along comes a £165'000 cash offer, within hours my Ex threatens me with court to accept. I am also of a mind that selling is the only way to resolve this silly situation.
I have accepted and my ex has written to say he accepts responsibility for 50% of the sales costs, outstanding mortgage and unsecured loan. Not far off my original figures it will be £9500 each.........
I have now had a letter saying that my ex proposes that the unsecured loan remains in place and he will pay his 50% each month!
Excuse me for being a bit daft but I agreed to the sale as I thought the situation would be over! Now he wants to continue with the loan which has a term of 26 years at an increased interest rate ( as it would stand alone from the mortgage) and is variabe!?! Agreed the payments will be as small as £40 each a month but this is not the clean break I want plus its just stupid borrowing! ;-( I would rather get all matters cleared up now. Its a good indication that my ex could not afford the negative equity situation he has forced and yet again I feel I am left having to 'swallow it'.

Ive looked at the loan.......... no room for debate as building society says it must be cleared in full. So I can not pay my half etc.

This may give me leverage as I have made the decidion to move out whether sale goes through or not , I vacate the property on 3rd May and move into a small rental. Of course this means my ex is then responsible for 50% of the mortgage payments (this means nothing as I dont think he would ever pay). I have advised my solicitor that I will not agree to a sale unless all debt is finalised on completion. I am willing to pull out of the sale and drop the keys off on his door step so he can manage the property thereafter as I have had enough! :mad:

Im dissapointed that my ex can force me to sell with the intention of tieing me in to an existing loan for possibly 26 years on a silly rate!?

The sale is at the point of signing contracts and im inclined NOT to sign until I have received confirmation that my ex will pay ALL his 50% on completion. But what if he comes back and says he simply can not get a personal loan and can not facilitate his 50% , where the hell do I stand then.....

I know there is no easy answer but if anyone has been through something similar, or has and ideas or knows any assassins........ :Tplease disclose them!

Jenniefour

Do not sign until this is sorted out. It appears, and I say that with a degree of scepticism, that he can't actually afford to sell at the moment which is why he wants the loan to continue - which is simply not possible. You need to decide if you are willing/able to pay off the entire loan if it has to be repaid when the property is sold. Would it be worth doing that to end this situation?

Did the letter saying he's willing to be responsible for half the costs go to both your solicitor and his? Could your solicitor have a word with his solicitor to tell him the sale simply can't proceed unless and until he has got the necessary funds in place to cover his share of everything? And make clear, if it is the case, that the loan has to be paid off when the property is sold. His solicitor should be having very serious words with him.

This sounds like he is trying to take you for a further financial ride - he should have made sure he had the necessary funds in place well before this got to the eve of exchange. Either he can't afford to sell and hadn't thought through what he was doing when he forced the sale or he's trying to evade his responsibilities by conveniently trying to shift them onto you.

What an awful situation to be in, and I hope you manage to resolve it in a fair manner.

starrieshillane

Thanks Jennie

the loan can stand seperate from the Mortgage after the sale........ but this is not the clean break I assumed would happen. I stupidly thought he was intending to clear all his liability as would I and not keep this daft loan going for possible 26 years :-(

I suspect your right in that he could afford £40 a month but cant afford any other way of financing .....like a personal loan to get rid of this one.

If he refuses to finalise everything upon completion I am inclined to pull out of the sale. Financially it may be a daft decision as I would then have a rental & 50% of a mortgage to pay BUT so long as I am out of the property we are on equal footing. Its been of no benefit to me staying in the property, I have paid for everything my ex has paid for nothing (literally).

I have considered paying the entire unsecured loan amount, but it seems so unfair to cripple myself for 3 yrs and he gets off virtually scot free. I would have to find £15500 while he would just need to cover his 50% of remaining mortage and sales costs £3500. Plus maybe this is exactly what he is trying to engineer?!

The letter i received stating he takes responsibility for his half share of sales costs, outstanding mortgage & unsecured loan came through solicitors.

Crazy situation and only the solicitors seem to benefiting!

Jenniefour

Did it mention the loan in his letter? If so, I think this can be drawn to his attention. And do add up how much your rental and the mortgage would cost over time - to make sure that you won't be even more out of pocket than paying off the loan. What a difficult situation.

At this stage you can hold out on exchange and see if that produces a result. And I can't help wondering why he's come back with this at the eleventh hour, when its likely he knows you've got a rental lined up. If you haven't signed the contract on the rental yet, you might want to consider not taking it up, even it means losing a deposit. Only you know this guy well enough to figure out if this is a genuine oversight or misunderstanding, or a deliberate attempt to shift a significant debt onto you. But if him not paying his share of the debt and you ending up with it all to pay - after selling the property and taking your share of the hit - is the worst option financially for you then it may be wiser to keep the property and get another lodger - but only if you would be OK with that as long term arrangement. A very tough call because the other issue is that properties in your area may decrease even more in value, adding up the negative equity. And you will be liable for some legal fees anyway.

Do you both have to deposit the money owing with the solicitors before exchange? I hope so. And did both solicitors know about this loan and you wanted it included in the clean break agreement from the off? If so, I would hope he's under plenty of pressure from his own solicitor.

starrieshillane

The letter does include the loan but its the same letter where he proposes to keep the 26 year loan going :-(

I have lived in the address for 3 years paying a full repayment mortgage and offering to release him from all debt. I have had two lodgers in the past to assist in the affordability. My attitude was one of id rather keep my house and share it than to lose it for debt. But nothing I have offered has been acceptable for my ex. Hence the sale.

Another reason why I have decided to leave the house is that my circumstances at work will be changing. I am a police officer and im expecting a £120 pcm increase into my pension payments at some point this year!
I also can not guarentee always having lodgers and if one leaves I am left wioth a shortfall until I can fill the space again.
More importantly I asked my ex if we could go to Interest Only when I agreed to sell the property so i would have an opportunity to save for the shortfall. He basically said no and at the moment I am on a standard variable rate that is only going to go up immenently. Ive worked out that 1/4 % rate rise means a £70 mortgage increase.I can not fix or adjust my mortgage terms as he will not cooperate in order to do so.
So basically I feel my time in the house may mean darker days than moving on.

It can all be resolved simply by both partied placing the funds with the solicitors so that on completion the matter is finally over! BUT even this is not easy if im faced with a guy that does not want to pay upfront and clearly wants to live with his small monthy payments over 26 years.

Im hoping that delaying the sale contracts may push him in the right direction. He must think that paying upfront is the best way out....... the alternative is that he then becomes responsible for half the monthly mortgage as I will no longer be living there.

However I have learnt that my ex doesnt always do what the average sensible person would do! I can only think his solicitors are making a good fee from him and stringing the whole matter out.

:mad:

princeofpounds

You should consult a lawyer. This is not a simple situation. Largely because your ex and possibly you seem to have forgotten there is a third party in this deal, the bank. You will find it hard to do anything without their permission.

Regarding the house sale - it is not unfair in general for one party to force a sale of a joint house. This is because even if you pay the mortgage you are trapping the other person's capital. If I took £100k from you to invest but said I'd give it back to you in 25 years, you would consider it theft, even if it were not a loss.

HOWEVER, there is NO capital in this house as it is in negative equity. So you would be doing him a favour by buying him out, even for zero. I don't understand why he doesn't get this, nor his lawyers apparently.

He might be able to go to court to secure an order of sale, but banks rarely let people sell for less than the face value of the loan as it is their collateral. As they are mortgagors of the property, they would likely block any sale no matter if the court gave permission to sell it without your agreement.

In some situations they would agree to convert any negative equity to a personal loan, but given you are already indebted and would likely object to this anyway then I don't see that happening.

Finally, if your father could convice the court he was willing and able to assume a mortgage with you that was bigger than the price offered by a third party then the court would view that as a better offer than the 165 or whatever (as taking away the debt is the same as paying money that then has to be put against a mortgage).

Has your ex actually ASKED the bank if he could sell? Have you?

In a normal situation of positive equity I would be with your ex 100%, but in this situation he appears to be illogical.

If necessary you can go to court - you appear to have a reasonable stance - but I'd personally prefer to do it with a solicitor than without.

Regarding the personal loan, you are both liable for this (not even 50/50 - each and BOTH of you are liable for the full amount). I don't think there is much you can do here short term, as you both technically agreed to be in the loan. If he refused to pay anything you could pay up and then sue him for the rest with the argument that you had an implied 50/50 contract between you both, but if he pays up he is meeting the obligations you both agreed in the first place.

One thing I can't advise you on is if there is any cross-relationships between the personal loan and mortgage products that further restricts you both.

starrieshillane

Firstly thank you both for your comments.......... sometime a discussion or another view can help solve a situation.

The Building Society have been fully informed from the off and have been happy for me to have lodgers and are happy that the house is to be sold for £165 as long as we pay the shortfall in the Mortgage. The loan is being treated as a different entity and can stand alone jointly and severally etc.......

Lawyers have been involved since my ex left and have been tring to negotiate aa settlement but my ex just wants the house sold ........ unfortunately even for debt .

Im just concerned that I do not want to be stuck on a 12000 loan with my ex for 26 years after the sale of the house, I would like to get it all sorted on the day of completion. After three years I am dissapointed that my ex does not want the clean break that I so desire. It was only a matter of months ago that he could have walked away having either paid £6000 to get rid of the loan and I took him off the mortgage or I took him off the mortgage AND gave him a full indemntiy against the loan with the intention of overpaying to get rid asap. Now he seems happier to pay £3500 to finalise his half of the mortgage and be stuck on a 26 year loan with me and unreasonable rates ?!?!

I think most of my difficulty comes from not understanding the situation from his end....... but I just dont see where im being unreasonable

Foggster

Sit tight. Refuse to sign. I know you dont want the house anymore but I wouldnt budge on this. Even if this house sale falls through and you leave, he may well move people in or move back himself. There will come a time when you just wont be able to afford the legal costs and it could all get very messy indeed.

dancingfairy

Don't know if you can try this but if you can convince your ex that you really are willing to let the house be repossed and go bankrupt then he will become liable for the full amount. He is unlikely to fall for it given that you are a police officer and would probably lose your job but you could threaten it?
df

Sensible_Jess

Hi OP

Three bits of advise from me:
1) Don't settle for anything less than a clean break from your ex. Even if this means you taking on the entire debt from the loan (unfair I know - but you have already offered this once). From what you have said, it sounds to me that he is more than likely to default on the loan payments after the house is sold - meaning you will be chased for them anyway.

2) Don't sign the contract for the house until the above has been agreed upon in some form of signed / witnessed communication from your ex written down by a solicitor. The house is your only piece of leverage with your ex (as I think you recognise). Whatever he says now will evapourate as soon as the house is sold if it's not down in black and white.
Have you asked your solicitor / bank frankly what would happen if you called his bluff and asked him to take you to court over the sale? It might be worth knowing the 'worse case scenario (IMO)

3) Don't be tempted to 'give in' and leave the house for your ex to pay off the mortgage. He won't - he hasn't for the past three years, why would he start now? You will still be chased for the debt. The bank doesn't consider 'my half / his half' - just a debt that needs paying by one, or both of you.

I wish you all of the best and hope that it turns out OK for you.
There is light at the end of the tunnel - promise!

S_J

starrieshillane

Thanks all ......... It must come to an end soon! Much appreciate your comments:beer: