Girlfriends parents losing house. Need Help!

greenman2

Hi ian_jamieson, I admire the fact that you are thinking about ways to help.

I have to say though that I would be really wary of doing this...in my opinion, it could well happen that the relationship with your girlfriend (however strong) goes pearshaped, as when it gets down to the nittygritty of you and her parents taking financial decisions for your own interests, people tend to take the sides of their family.
IMHO, you could end up losing your girlfriend and taking a big hit financially.

Good luck.

ian_jamieson

I've had this offer: High fees, but it's either that or they'll be repossessed.

Proposal:

Costs to us:

£5,000 mortgage arrears which must be repaid urgently.

£15,000 to complete work on property in order to get property certificate

Current Situation

2 weeks to sort out due to mortgage arrears, current mortgage outstanding is £94,000 plus £10,000 secured loan and if not resolved property will be repossessed and probably sold at auction for the outstanding mortgage and secured loan balance.


What we are looking for:

If selling price is £240,000 or above we would be looking for our initial £20,000 investment plus £50,000 of the selling price

If selling price is £220,000 we would be looking to get back our £20,000 investment plus £36,000 of the selling price.

If sold for £200,000 we would be looking to get back our £20,000 investment plus £30,000 of the selling price.

If sold for £185,000 we would be looking to get back our £20,000 investment plus £20,000 of the selling price.

Our solicitors will place an inhibition order on the property for £50,000 which will ensure that we get the proceeds we require on selling the property.

We will also instruct a structural survey on the property before we sign any agreement.

Our regular company joiner will get us all quotations for work that needs to be carried out prior to us signing agreement and if acceptable then we will proceed on the basis he carries out and oversees all work.

We will appoint estate agents we have used before to sell and market the property to maximise the selling price and after agents fees, solicitors fees and any other fees have been taken out this is when the equity will be divided as agreed.

If the house has not been sold after 3 months of our loan being given then the price will be changed to fixed price of 200k and if not sold 3 month after this then the price will be brought down again to 180k in order to sell the property.

Everything on here is subject to our solicitor being happy and both the quotations and survey being satisfactory.

The terms are non negotiable and if we are all in agreement our agreement would be very clear that we will deal with all aspects of selling including dealing directly with the estate agents and the seller will not be able to turn down any fair offer or not co-operate with the agents or ourselves at any stage and if this is the case we would then force a sale to get our monies back.

The other option and again subject to a few points is that we will purchase the property for £110,000 now before repossession and will pay him a £15,000 bonus once we finish and sell the property.

dopester

ian_jamieson wrote: »

Current Situation

2 weeks to sort out due to mortgage arrears, current mortgage outstanding is £94,000 plus £10,000 secured loan and if not resolved property will be repossessed and probably sold at auction for the outstanding mortgage and secured loan balance.

What we are looking for:

If selling price is £240,000 or above we would be looking for our initial £20,000 investment plus £50,000 of the selling price

If selling price is £220,000 we would be looking to get back our £20,000 investment plus £36,000 of the selling price.

If sold for £200,000 we would be looking to get back our £20,000 investment plus £30,000 of the selling price.

If sold for £185,000 we would be looking to get back our £20,000 investment plus £20,000 of the selling price.

Sounds like dreamland thinking to me. Or at least very risky, to you.

Firstly you might want to edit your post slightly, unless you intentionally meant to put the name of the house in. I've just had a look at a brochure for it, when it was listed for sale at offers over £280,000.

You've already seen how rapidly market values can change. Swoosh... one time in the market someone willing to pay £300,000 it was valued at... now you can't even sell it, without the updates, when it's up for sale at £180K (below).

And you expect to do the updates and someone come along and pay you £240K after you improve the granny flat?

No one in the market is biting at £180,000 it's now up for sale at, with the granny flat unmodernised or requiring work and updates.

With your own financial input you're proposing, £240K is what you'd like, but £185K is your bottom line then for what you'd escape (sell) with in a worse case situation after updating granny flat?

Possibly, but I'd just lower it to £160K now and not take on the risk. That's if you're definitely not getting buyer interest now at £180K. Similar to the option you set out below.

ian_jamieson wrote: »

The house is actually very big and was build by my girlfriends dad (He's a builder). They hit some difficulties during the past couple of years (who hasn't) and with not much work they've been struggling to keep up repayments on £100,000. His mortgage rate is currently 8%.

They've been trying to sell it, and have reduced the price to £180,000 - Initially it was worth £300,000 before the recession. But can't sell it either.

ian_jamieson wrote: »

I'll have to see if I can find a buyer for much less than the current value. Maybe £180,000 - £190,000. Should give the buyer some finance to finish the granny flat. It doesn't look like much.

GDB2222

Whatever happens, the property will have to be sold and they'll have to move out. In theory, if it's repossessed, the owners should get the whole of any excess value over and above the loans secured on it. The trouble is it may get knocked out cheaply at auction, and there will be a lot of costs to meet. Still, if it sells for say £150k, they ought to get over £30k back, and for every £1 it goes for over £150k they'll get that £1. Will they get any more from the offer you mentioned above? Well, clearly not if they accept the '£15k bonus when sold' offer - unless the property only reaches a tiny figure at auction.

The other option seems to involve your g/f's parents still being liable for the mortgage interest, and so on, whilst the refurbishment is in someone else's hands. There could be another arrears crisis in a couple of months' time. They will be liable to meet all the selling costs out of their share of the house proceeds. You need to do your sums extremely carefully on this option.

I'm just wondering whether the repossession route might not be the best one for them? At least, then, they get the full amount left over after the loans are settled.

puddy

why is it unmortgagable just because of work on the granny flat?

surely its just simply over priced?

what is the actual situation with regards reposession? you mention that the lenders are going into administration but that also they are being reposessed for mortgage arrears of 5k. has there been a court order, what happened at court, what did your inlaws present to court to argue that the order for posession shouldnt be given? did they even turn up?

sleepless_saver

OP, I'd suggest removing the property name (post 33) and other identifiers from your posts, as your gf's parents might prefer that their problems aren't made public.

ian_jamieson

puddy wrote: »

why is it unmortgagable just because of work on the granny flat?

surely its just simply over priced?

what is the actual situation with regards reposession? you mention that the lenders are going into administration but that also they are being reposessed for mortgage arrears of 5k. has there been a court order, what happened at court, what did your inlaws present to court to argue that the order for posession shouldnt be given? did they even turn up?

Yeah, there's a little work in the granny flat to be completed, and it needs a completion certificate. It's not a lot though, rooms are all there. Think it's just the en-suit to the bedroom.

The situation is that they have two weeks to get out. Court order passed and it's the administrators who're forcing the sale. The time it went to court, he was still getting treatment for the broken back, so it went into decree???

Banks aren't giving people mortgages on an unfinished property. There's been lots of interest and viewers. When it goes to auction, there will be plenty of buyers and offers, we know this from the amount of enquiries.

puddy

so didnt either of them write to the court to say that he was in hospital or immobile to adjourn proceedings? did the wife not turn up on her own?

i know its all passed now and not helpful to you but quite frankly im amazed that with the risk of losing the house, no one seems to have tried to save it by appealing to the judge to give the (quite reasonable) extenuating circumstances that he has a broken back and so cant work, will be completing work on the property to make it sellable etc

also why didnt they rent it out or get lodgers? have they learned what they needed to do? because if not, then your attempts to help will merely drag you into the mess too

ian_jamieson

puddy wrote: »

so didnt either of them write to the court to say that he was in hospital or immobile to adjourn proceedings? did the wife not turn up on her own?

i know its all passed now and not helpful to you but quite frankly im amazed that with the risk of losing the house, no one seems to have tried to save it by appealing to the judge to give the (quite reasonable) extenuating circumstances that he has a broken back and so cant work, will be completing work on the property to make it sellable etc

also why didnt they rent it out or get lodgers? have they learned what they needed to do? because if not, then your attempts to help will merely drag you into the mess too

The offer above isn't from me, it's from a financial company, hence the reason it's so high.

They've had extensions by the court etc. I found out today, the only reason they defaulted was because their dog got ill, and it cost them a few k for a blood transfusion. He was only 3 days late, and they started repossession.

All he needs to do it get the little work done in the granny flat, get the completion certificate and sell it for the price he wants.

greenman2

I agree with removing the name of the property to protect identities.

I looked at the pdf brochure for the property - semi detached, offers over £280k.
For anybody not familiar with the Scottish system, 'offers over' ( as opposed to fixed price) is where the sellers are looking for at least 10% more than that and set the offers over price accordingly.It's in effect a blind auction, and at the height of the property boom, many properties sold for 25-30% above their offers over price. Any potential buyers would have known that and may not have even wanted to incur the costs of noting interest through a solicitor,survey etc, when the price the sellers were looking to accept was over £300k

The brochure states that the property is close to a golf course which will open in 2009...that suggests to me that the property has been on the market since at least 2008. Do you know how many notes of interest they had, and if they set a closing date, and if there were offers?