2nd charge on property we r buying. What would u do?

Ronoli14

Hi, hope someone here can offer some advice. We are in the process of buying a new house, having sold our old house in february and moved in my sisters empty house. She moved to South Africa and the house is up for sale. This is the second house we have tried to buy. The first one fell through because of bad survey reports.

After three months of this purchase looks like this one is about to fall through as well. The house is empty, having been rented for 15 years. It needs a lot of work but we saw the potential. The house was on for £325k. We initially offered £305k which was rejected so we up it to our max at £312k. Four weeks ago our solicitors searches came back with a second charge on the property. For four weeks we have been asking for more details on the second charge with no really clarity from the vendors solicitor or estate agent. I then called the estate agent on Tuesday and told them that we were ready to pull out if we did not get a clear indication of time scales. He said he would call the vendors solicitor and get back to me. Today we find out that the old tenants went bankrupt and that the second charge was placed. The vendors solicitor have said that from their experience it will take two weeks to clear at the land registry department.
The estate agents suggested asking for a discount in price.

We are not sure whether to believe this time scale or not. Does anyone have any experience of this. What would you do. Call it a day and move on or ask for a discount. If so how much. We have limited time where we are now and need to make a decision fairly quickly

Please advice

ACG

Ask your solicitor how long it usually takes?

Ronoli14

Thanks. We have asked our solicitor and she says that two weeks is a realistic time frame if the figures add up and if there isn't any other issue that we do not know about. Can a house have a second charge generated by tenants. Just dosent sound right to me. Makes me think there is more to this than they are telling us.

TrickyDicky101

That's what I don't get - tenants don't own the house they reside in so how can a charge be placed on the property in respect of them?

It's not a leasehold house and you mean the leaseholders rather than tenants?

Ronoli14

Definitely not a leasehold house. The vendor is not been completely honest. My feelings are that there is more to this than they are letting on. We have decided to call the agents and tell them that we are willing to wait two weeks for a £4k discount and will be pulling out after the two weeks if this is not sorted by hen. If they say no then we walk now. What a waste of a few months.

Land_Registry

Can you clarify what 'charge' it is perhaps? - you refer to it as a 2nd charge which would normally be a registered charge secured against the property. Is it a registered charge?

Or is it an interest protected in some other way against the old tenants e.g. restriction, notice etc?

There is a distinct difference in how such entries are removed - a registered charge may be removed quite quickly depending on who the lender is and whether they use electronic services or rely on paper forms.

If the charge is protected in some other way then there may be a need to serve notice on the beneficiary which can add to the timescales involved.

Ronoli14

Our solicitor has only ever refered to it as a 2nd charge. Will have to ask her when she calls us back today after speaking to the vendors solicitor. The tenants have been out of the property since December so I am hoping from what you have said that it is a registered charge. The latest information we have today is that the house is owned by an elderly man and his son has been renting it out to friends who have built a debt of over. £30 0000 on the property. Estate agent seems to think the son who is also dealing with the sale had no official tenancy agreement with the tenants and has been signing things off on their behalf over the past 15 years that it was rented. It all seems rather complicated and I'm beginning to lose hope. We have said that we will hold out for another two weeks if they are willing to discount the £4k. Waiting to hear back form estate agent but beginning to think that we should just walk now. I am so stressed by all this.

How long roughly would you expect both types of charges that you mention to take to get removed

Thanks for your help

Land_Registry

I would suggest confirming exactly what is registered first - we can speculate around timescales etc but none may be relevant.

I appreciate that you have not received any clarity from the seller's to date but you or your own solicitor can or have viewed the actual registered title. Can you confirm what entry exists which refers to this 2nd charge?

It should not be necessary for you to check directly but you should be able to view the title online here - there is a charge of £3 but as mentioned the information should already be available to you.

JencParker

Land_Registry_representative wrote: »

I would suggest confirming exactly what is registered first - we can speculate around timescales etc but none may be relevant.

I appreciate that you have not received any clarity from the seller's to date but you or your own solicitor can or have viewed the actual registered title. Can you confirm what entry exists which refers to this 2nd charge?

It should not be necessary for you to check directly but you should be able to view the title online here - there is a charge of £3 but as mentioned the information should already be available to you.

Apologies for jumping in on someone else's thread, but noticed your reply.

I am considering selling my house which has a small mortgage left with a large amount of equity. It also has a charge from Legal Aid for fees from my divorce. I will not be buying straight away and there is plenty of equity to cover the remaining mortgage and the legal aid charge. Will this cause a problem for any future buyer?

lawlie

This doesn't stack up at all, and I'm afraid all sounds very dodgy.

If your solicitor is referring to it as a "charge", I would take that to mean that the owner of the house has borrowed money off someone/some company, which has taken security over the property.

If this is indeed the issue, what your solicitor needs to ensure is that both sets of chargeholders' (mortgage bank and whoever second chargeholder is) debt can be redeemed from the monies from the sale of the house. I.E. that what you are paying can cover both debts.

lawlie

JencParker wrote: »

Apologies for jumping in on someone else's thread, but noticed your reply.

I am considering selling my house which has a small mortgage left with a large amount of equity. It also has a charge from Legal Aid for fees from my divorce. I will not be buying straight away and there is plenty of equity to cover the remaining mortgage and the legal aid charge. Will this cause a problem for any future buyer?

Have the fees from your divorce been paid off yet? If so, they should remove the charge (regardless of whether the house is sold).

If not, as long as you are able to cover both debts from the proceeds of the sale (which sounds like you can), then this shouldn't be an issue. The new buyer's solicitor will ask for proof etc. from the chargeholders that they will release their security once repaid.