Buying a property with an 'equitable charge' - repo?

nicp60

Hi there,
I've searched the forums but couldn't find the answer to my specific issue.
I'm hoping to make an offer on a property and have a copy of the title deed from land registry. I wanted to find out if it was a repossession (EA being cagey), but it's thrown up a few things which I'm not sure of. The house was bought by the previous owners in 2005 for £120k, and is now marketed for £95k. Can anyone help with these?

1. The registered owners are individuals - if this house had been repossessed, wouldn't it show the bank as the owner?

2. There are 3 charges showing on the property. These are:

• Northern Rock - same date as the transfer of the title, so original mortgage I'm assuming
• First Plus - 18 months after the sale, so sec loan??
• The most puzzling -
  • Equitable charge created by an interim order of the North Shields County Court dated 3 years after sale in favour of Northern Rock Plc.
  
  
  

I'm guessing that NR got a CO on the property, but now I'm concerned that there won't be enough equity if I offer the asking price to cover all the charges and that NR will block the sale. How likely is this, do you think, given that they're the lender anyway??

Thanks for your help!

silvercar

A lot of Northern Rock mortgages were "Northern Rock Together" mortgages, they comprised a mortgage and an unsecured loan. Once the second charge came along and possibly when NR realised the mortgagee was in difficulty they may have decided to secure the unsecured loan on the property by way of the equitable charge.

Thrugelmir

Who is selling the property?

nicp60

Thrugelmir wrote: »

Who is selling the property?

A local estate agent. When I asked them, they said they didn't know if it was a repossession or not, but it was one of those awful group viewings, so they probably didn't want to give anything away.

nicp60

silvercar wrote: »

A lot of Northern Rock mortgages were "Northern Rock Together" mortgages, they comprised a mortgage and an unsecured loan. Once the second charge came along and possibly when NR realised the mortgagee was in difficulty they may have decided to secure the unsecured loan on the property by way of the equitable charge.

That's very interesting - thanks for that.

Thrugelmir

nicp60 wrote: »

A local estate agent. When I asked them, they said they didn't know if it was a repossession or not,

Then if you've a serious interest in the property ask them. Little point in surmising from information on the public record. Ask direct questions and explain your concerns.

If the vendor is selling the property then there may well be issues. That may be best avoided. Before you expend money in fees etc only to find that the vendor is unable to proceed with the transaction.

Land_Registry

nicp60 wrote: »

Hi there,
I've searched the forums but couldn't find the answer to my specific issue.
I'm hoping to make an offer on a property and have a copy of the title deed from land registry. I wanted to find out if it was a repossession (EA being cagey), but it's thrown up a few things which I'm not sure of. The house was bought by the previous owners in 2005 for £120k, and is now marketed for £95k. Can anyone help with these?

1. The registered owners are individuals - if this house had been repossessed, wouldn't it show the bank as the owner? the Proprietorship (B) register would refer to the legal owners whilst the Charges (C) register would refer to the registered charge (mortgage). The lender would not normally seek to register themselves as the legal owner if the property had been repossessed. The legal process, if followed correctly, provides them with the authority to sell.

2. There are 3 charges showing on the property. These are:

• Northern Rock - same date as the transfer of the title, so original mortgage I'm assuming - correct
• First Plus - 18 months after the sale, so sec loan?? if it is also a registered charge then most likely and is referred to as a second charge
• The most puzzling -
  • Equitable charge created by an interim order of the North Shields County Court dated 3 years after sale in favour of Northern Rock Plc.

I'm guessing that NR got a CO on the property - CO as you suggest, but now I'm concerned that there won't be enough equity if I offer the asking price to cover all the charges and that NR will block the sale. How likely is this, do you think, given that they're the lender anyway??
- take a look at our online Practice Guide 75 and section 3 in particular. If it is a repossession then the lender is likely to have had a say in or has indeed set the asking price. Others may be able to advise but there can be many factors as to why the current asking prce is much less than what was paid for 8 years previously. One reason sometimes offered is that they wish to sell quickly and to simply recoup the money they are owed although they are legally obliged to seek the 'best possible price'. Land Registry is not a party to or made aware of the reasons behind an agreed sale price though. Thanks for your help!

I have added comments in red, which are hopefully of some help. I would recommend reading the guide for a wider understanding of how a repossession is registered with Land Registry. This will assist with understanding how the first charge can take priority over subsequent charges/interests. Legal advice is always recommended of course.

nicp60

Wow, what great information!

I'm speaking to the agent today and will hopefully get an appointment to make an offer and ask about these issues.

Thanks!