Credit Card charge against property, advice on options when selling?

ideal_knowledge001

Hello Guys,

I needed some advice for one of my uncles.


My uncle's son is looking to buy the property off his dad via a concessionary purchase. The outstanding mortgage amount on the property is £170,000.00.

My uncle is looking to sell the property to him for £170,000.00. The son will give a down payment of £20,000 so then he will need to take out a mortgage of £150,000.00

However my uncle has a credit card charge against the property which the court has put in place. The term states whenever my uncle sells the property to someone, then after paying back the lender (the mortgage company), any remaining funds will go towards clearing the credit card charge first and if after that anything is left over, then it will go to my uncle.

My question is if my uncle was to sell the property to his son for £170,000.00 just enough to clear off the mortgage exact then what happens to the credit card charge? There won’t be any extra funds to pay this charge off.

Is it possible to avoid paying the charge like this or in any other way? If so are there any risks?

If this works and the son does purchase the property for £170,000.00 what happens to the credit card charge?

Any replies will be really helpful so I can advise my cousin.

Thank you

ossie

ideal_knowledge001 wrote: »

My uncle's son is looking to buy the property off his dad via a concessionary purchase. The outstanding mortgage amount on the property is £170,000.00.

How much is the property actually worth?

holly_hobby

Essentially its deprivation of assets, whether its a deliberate exercise to deprive their creditors or not, although to sell for a sum lessser than market value WHERE Uncle also has unpaid creditors relying on the sale, certainly smacks of deliberate action.

Furthermore, if the credit card firm won't be fully repaid on sale (due to the discounted sale price), they may refuse to release their charge (which is actually a court charging order), which means that your cousin will be prevented from completing, as the cc provider will be preventing free title.

This is a different situation to where the property is actually only worth x amount, whereby sale to the highest bidder will still not satisfy the creditors. In that situation (if there is no foreseen change to market conditions), the debtor would mediate with their creditors on how to proceed, but the ball really is in the chargees court !

Unfortunately your Uncle lost the luxury of offering discounted pch prices, when he defaulted on creditors with resulting court orders. So in this situ, selling for market value and settling his debts, really is the only route (financially and peeps will also say, morally).

Of course, I'm not the lender, but would be surprised if they agreed to remove their charge if there is the possibility of settlement on property disposal at market value.

Hope this helps ...

Holly

betmunch

I dont believe he will be able to complete this transaction as the new mortgage will not have the first charge on the property, therefore will not release the funds for the mortgage.

If your uncles mortgage is paid off the credit card charge will become the first charge, with no money spare to pay them off then the new mortgage would have to take second charge which is unacceptable.

Your uncle will need to receive enough money to pay off all secured charges.

How much is the credit card charge on the property?

betmunch

holly_hobby wrote: »

Essentially its deprivation of assets, whether its a deliberate exercise to deprive their creditors or not, although to sell for a sum lessser than market value WHERE Uncle also has unpaid creditors relying on the sale, certainly smacks of deliberate action.

Furthermore, if the credit card firm won't be fully repaid on sale (due to the discounted sale price), they may refuse to release their charge (which is actually a court charging order), which means that your cousin will be prevented from completing, as the cc provider will be preventing free title.

This is a different situation to where the property is actually only worth x amount, whereby sale to the highest bidder will still not satisfy the creditors. In that situation (if there is no foreseen change to market conditions), the debtor would mediate with their creditors on how to proceed, but the ball really is in the chargees court !

Unfortunately your Uncle lost the luxury of offering discounted pch prices, when he defaulted on creditors with resulting court orders. So in this situ, selling for market value and settling his debts, really is the only route (financially and peeps will also say, morally).

Of course, I'm not the lender, but would be surprised if they agreed to remove their charge if there is the possibility of settlement on property disposal.

Hope this helps ...

Holly

Beat me too it, and more eloquently too!

holly_hobby

Thanks and hello stranger :wave: !


H xx

ideal_knowledge001

Thanks for all the information guys, I believe the property is worth around 200k and the credit card possibly 10k.

The thing is my cousin cannot afford the full down payment so if the 10k credit card fee has to be paid now then he probably will not purchase the property.

I agree morally it is correct to pay it but my uncle is really stuck his house is interest only and he cannot afford repayment so he is going no where really. Stuck in a big mess.

holly_hobby

Sorry, but thats the chips I'm afraid - CC provider wont' be interested or swayed by the fact that your cousin can't afford to pay market value, and Dad wants to give them a leg up onto the housing ladder.

Also, if Dad intends to sell to Son, but remain resident post completion (which it now sounds as is the case), Son won't secure a mortgage in any event, due to vacant possession requirements and possessionary interest rights, which will effect any future possession order the Sons lender may apply for on default, and will therefore prevent their approving the mge.

Solution is, Dad sells the property for market value (or at least enough to settle the mge and secured borrowings), downscales or moves into rented within his means.

Hope this helps

Holly x

Thrugelmir

ideal_knowledge001 wrote: »

I agree morally it is correct to pay it but my uncle is really stuck his house is interest only and he cannot afford repayment so he is going no where really. Stuck in a big mess.

Selling the property at market value is the way forward.

If there is a charge on the property then this will need to discharged (settled) in order to transfer title.

John1993_2

ideal_knowledge001 wrote: »

Thanks for all the information guys, I believe the property is worth around 200k and the credit card possibly 10k.

The thing is my cousin cannot afford the full down payment so if the 10k credit card fee has to be paid now then he probably will not purchase the property.

I agree morally it is correct to pay it but my uncle is really stuck his house is interest only and he cannot afford repayment so he is going no where really. Stuck in a big mess.

He can sell it at the right price, so isn't stuck at all. He's only "stuck" as he's trying to screw over the people to whom he owes money by selling the house at the wrong price.

ideal_knowledge001

Solution is, Dad sells the property for market value (or at least enough to settle the mge and secured borrowings), downscales or moves into rented within his means.

Hope this helps

Holly x[/QUOTE]


Thanks Holly you have been very helpful. Is there a way I can find out the exact charges on the property?