house purchase: borrowing money from family - contract options ?

zzzLazyDaisy

nomadonkey wrote: »

Yes, but family member wants something more secure then a charge. Admittedly, they're being difficult.

What security do you thing a bank has when to take a mortgage with them? They take a security over the property.

It sounds to me as if this is not a legal question at all, but a family and relationship one.

You bought the property at auction, with no job and not enough money to complete the purchase. You are relying on family to lend you the balance of the purchase price, but you and your family did not agree the mechanism for the loan before you went ahead and bought the property. There are clearly trust issues between you and your family - they want more security than a charge over the property and wish to be joint owners so they can protect their investment in case you fail to remortgage and repay the loan as you have promised - you do not want this in case they fail to sell you your half back at cost when you are in a position to pay them back.

You are the one over a barrel, since you have bought a house which you have no way of paying for.

Your solicitor cannot advise you what your family should do. They must go and see a separate solicitor who will advise THEM how to protect THEIR interests. Which may not be what you would like to happen.

YOUR solicitor will advise YOU on their proposals. If a condition of them loaning you the money is that they own the house jointly with you until you repay the money, then you have two options - accept their terms or borrow the money from another source (though your lack of income or any means of repaying the loan might be problematic)

BristolBob

nomadonkey wrote: »

Yes, but family member wants something more secure then a charge. Admittedly, they're being difficult.

"Difficult" in wanting a little security in letting you borrow 50% of the purchase price for a house?

InMyDreams

nomadonkey wrote: »

Yes, but family member wants something more secure then a charge. Admittedly, they're being difficult.

I also don't think that it's they that are being difficult. I think it's very lucky that you have family willing and able to help you out of the hole you've dug yourself. I think if you need them to stump up 50% of the cost then it's completely reasonable to want a 50% share in the house. And why on earth would you expect them to sell it back to you 'at cost'?

You clearly don't trust each other. This sounds like a recipe for disaster to me (for family relationships if nothing else) and if I was them I wouldn't touch it with a barge pole.

zzzLazyDaisy

OP, in very simple terms...

YOU have dug yourself into a hole

You want your family to throw you a rope so you can climb out of the hole

They have chosen a rope which will meet the need to get you out of the hole

If you don't like the rope they have chosen, you may end up stuck in the hole.

hazyjo

nomadonkey wrote: »

They want a guarantee that either I'll remortgage in a year or they can get the money back by forcing a sale.

Is this possible? What kind of contract needs to be drawn up? And what would be the process for them to reclaim their money. I need to reassure them its straightforward.

Alternatively, they've suggested joint ownership, but I'm not keen on them being on the title deeds. Mainly because I can't find a way where I can guarantee they'll sell back to me at cost.

How can you 'guarantee' that you will get a mortgage? You can't. Nor can you guarantee that you will get (and still be in) a job. You also can't guarantee the house will sell if a sale is forced. Who sets the price? Who decides whether an offer is acceptable? Surely they risk you overpricing it and sitting tight refusing all offers, waiting for the asking price, or you might drag out any sale, or try to put viewers off. Just too many variables, I don't see how you can offer any sort of 'contract' other than the fact you agree to repay their loan in full within X amount of months/years and they take that at face value at their risk.

Surely this should have been sorted before buying at auction? Seems like an ENORMOUS risk to be sorting it out afterwards!

Jx

tim123456789

nomadonkey wrote: »

Yes, but family member wants something more secure then a charge. Admittedly, they're being difficult.

Short of having a 50% ownership and all of the tax problems that will bring, there is nothing better than a charge.

why is that not enough

zzzLazyDaisy

As I understand it, OP's family want joint ownership as a condition of loaning him the money that he needs to complete the purchase. OP does not agree to this.

grifferz

Just out of interest, OP, what do you see as a fair contract term should you fail to get a mortgage within the stated time period?

Your solicitor will probably not be willing to advise both you and your lender (family) on the same transaction because of the conflict of interest.

Have you asked your family to get their solicitor to tell you what they require?

ValHaller

nomadonkey wrote: »

Yes, but family member wants something more secure then a charge. Admittedly, they're being difficult.

There is nothing more secure than a charge. A charge is more secure than ownership - if you ask anyone who has been repo'd.

zzzLazyDaisy

ValHaller wrote: »

There is nothing more secure than a charge. A charge is more secure than ownership - if you ask anyone who has been repo'd.

In this case, provided the house is purchased as tenants in common in equal shares, the family's half would be safe from creditors even if it is jointly owned (it's being bought for cash, so no chance of repo).

But maybe the family want a more 'hands on' approach - after all as joint owners they could come and go as they please, or even rent their half out to lodgers if OP failed to pay up as agreed ;-)