Advice on eviction

ScorpiondeRooftrouser

BigAunty wrote: »

The parents evidentally consented to the 50k given to the OP.

Looks like the original valuation was extremely optimistic and the property has actually reduced in value from its original totally b*u*l*l*s*h*t valuation of 250k to around 190k, that's a dip of 60k albeit this could change in the future and there is approx 40k equity there now (excluding costs) but this will go down the s*h*i*t*t*e*r when its repossessed.

If her parents understood the reality of the situation, they would be doing things like offering to cancel that rent free agreement, contributing towards the mortgage, downsizing, agreeing to sell the property, seeing if they could submit a valid HB claim, applying to the local council as homeless due to the future repossession of the property.

Instead they are waving a piece of paper at their daughter who can't afford school shoes for her children, one that is now worthless due to impending repossession when they could have walked away with 30k plus equity and realised that she gave them 5 years of rent free accommodation and an opportunity to pay off their debts when realistically, before this, they would have lost their home to their debts.

No doubt they wanted a lifetime of free rent but the fact is all their daughter has managed to do after their lifetime of lifestyle debt and witless spending is give them a stay of execution for the inevitable. Their behaviour has equally led to this, not just the daughter - it is clear they don't care that she cannot afford to support them, they still have that lack of pragmatism, and they couldn't care less that her family is suffering through a contract that could never realisticaslly be fulfilled.

It's got nothing to do with whether they consented. That 50K was just added to the mortgage because the OP wanted some cash in hand. It needn't have existed at all and was not part of the transaction between parents and daughter, any more than if the OP extended the mortgage by 50K now.

Of course the transaction could have been fulfilled - similar ones are fulfilled all the time. The reason it can't be fulfilled is the financial circumstances of the daughter and her husband. We have no idea of how aware the parents were at the time of the transaction of these. Some would argue that they were none of their business. If we did this with my parents in law, I would take responsibility for my own finances.

BigAunty

ScorpiondeRooftrouser wrote: »

I have little doubt that if the parents were on here saying "We sold our 250K house to our daughter for 100K as long as she let us stay here rent free and now she wants to evict us; we have nowhere to go", people would be saying how dreadful the daughter was.

I agree but perhaps it would be more balanced if the posters here were aware that her daughter faced financial ruin, can't afford basic things for her family and she tried to facilitate their way out of suicide, homelessness and debt.

The posters may also raise some of the points we've outlined here with the OP such as 'why did you think this arrangement would be affordable', 'why did you sell before you realised that you had no HB entitlement' 'why did you not consider the deprivation of capital rules', 'why did you create a rent free agreement without speaking to a solicitor', 'why did you not explore other debt management and protection from repossession strategies before laying it onto your daughter' and so forth.

But yes, on the bare sketch of 'our daughter owns our property and says she can't honour the rent free agreement' would elicit sympathy.

ScorpiondeRooftrouser

BigAunty wrote: »

They are living in a property with 2 spare bedrooms while ordering her daughter to live in smaller rental properties to continue to afford this. It was purchased at a fraction of its worth but it is their fault that they owed creditors so much money.

She bought the property at the maximum that she could get a loan for because they racked up debts and put the onus on her to resolve it for them rather than change their behaviour or expectations.

The OP has not received any great benefit from this deal other than temporary use of a decent car and at significant detriment to herself and her family, who have a poorer standard of living as a result of it. Obviously, the OP hoped to achieve something out of it in the long run but both parties didn't do sufficient financial and risk planning to know that it was unsustainable.

Will you stop with the car? That was NOT a benefit of this deal, but a separate loan. Her benefit from the deal is 150K (variable with the market) of equity tied up in the house until her parents die. No more and no less.

BigAunty

ScorpiondeRooftrouser wrote: »

It's got nothing to do with whether they consented. That 50K was just added to the mortgage because the OP wanted some cash in hand. It needn't have existed at all and was not part of the transaction between parents and daughter, any more than if the OP extended the mortgage by 50K now.

Of course the transaction could have been fulfilled - similar ones are fulfilled all the time. The reason it can't be fulfilled is the financial circumstances of the daughter and her husband. We have no idea of how aware the parents were at the time of the transaction of these. Some would argue that they were none of their business. If we did this with my parents in law, I would take responsibility for my own finances.

Of course the elder parents consented to 50k going to the daughter or why would they have signed the sale documents?

You pitch this as if the OP doesn't want to pay, she says she can't pay. The parents clearly think that it is their daughter's problem around her finances that she needs to sort out and do not see this holistically.

That rent free agreement is not sustainable. The daughter is taking financial responsibility - she cannot pay their mortgage in the long-term and therefore is executing a debt prevention strategy - if that's not taking responsibility, I don't know what is.

That rent free agreement is a signed and valid document. Yet at the same time, it is a total fantasy, one that was signed in a vacuum, that doesn't take place in reality, is ultimately worthless, not sustainable.

I can't conceive of having to take care of my parents or my MIL in the way that the OP has been forced to. They live within their means, they pay their own expenses, they are kind to their children and grand-children. They are a similar age to the OPs parents but coming from a solidly working class background, have a deep aversion to debt and see it as a weakness, a lack of discipline - they both have extremely hard views on the topic.

BigAunty

ScorpiondeRooftrouser wrote: »

Her benefit from the deal is 150K (variable with the market) of equity tied up in the house until her parents die. No more and no less.

There is currently not 150k equity in the property - how did you arrive at that figure?

The parents did sell the property for less than its originally exaggerated worth but there is nowhere near that figure in actual, tangible equity at all. Selling for less than it is worth does not automatically create equity. Equity is current value minus current mortgage balance and sales fees.

There could be 150k equity in the property in 10, 20, 30 years but at the moment there is around 30-35k if it is sold today. It will be a very long time to pay the mortgage down, requiring many years of property price inflation to get it increased to up to x5 that sum (from 30k to 150k equity).

If it all went smoothly, and magically the OP could afford paying over 8k per year for perhaps at least 20 years,she could reap the reward of inheritance and property price inflation by a handsome sum.

But at the moment, she can barely afford to clothe her children. Talk of her realising 150k equity is extremely optimistic.

ScorpiondeRooftrouser

BigAunty wrote: »

Of course the elder parents consented to 50k going to the daughter or why would they have signed the sale documents?

I'm not saying they didn't consent. I am saying it doesn't matter whether they consented. That 50K is a red herring and was nothing to do with the transaction. That's a basic thing you need to understand to see what has happened here.

The transaction was
Daughter pays parents £100K for £250K house on condition they live there rent free.

The additional 50K she added to the loan was her business. They didn't get any of it. If she had borrowed £100K and kept none, or £200K and kept £100K, it would not have changed the transaction between her and them. The 50K was a separate (and ill-advised) transaction between the daughter and her bank.

ScorpiondeRooftrouser

BigAunty wrote: »

There is currently not 150k equity in the property - how did you arrive at that figure?

The parents did sell the property for less than its originally exaggerated worth but there is nowhere near that figure in actual, tangible equity at all. Selling for less than it is worth does not automatically create equity. Equity is current value minus current mortgage balance and sales fees.

There could be 150k equity in the property in 10, 20, 30 years but at the moment there is around 30-35k if it is sold today. It will be a very long time to pay the mortgage down, requiring many years of property price inflation to get it increased to up to x5 that sum (from 30k to 150k equity).

If it all went smoothly, and magically the OP could afford paying over 8k per year for perhaps at least 20 years,she could reap the reward of inheritance and property price inflation by a handsome sum.

But at the moment, she can barely afford to clothe her children. Talk of her realising 150k equity is extremely optimistic.

I arrived at that figure because that what she says the house was valued at at the time. Subsequent depreciation does not affect that that was the deal on offer at the time the deal was done. That depreciation is the problem of the current owner of the house, just as any subsequent appreciation will be to her benefit.

Also, the equity for the transaction between daughter and parents is based on the price she paid them, and not the size of the mortgage she took out. As she kept £50K of that it affects the equity between the value of the house and the mortgage, but not the equity that was passed to her in the deal that was struck between her and the parents. Again, if she extended the mortgage by 50K now, it would not affect the deal she struck then. it is exactly the same situation.

BigAunty

Rocky99 wrote: »

I have served a s21 on them, expires 1st feb?

.

Did anyone check that you filled it in correctly, such as that solicitor? Do you have proof that you sent it?

My understanding is that a high percentage of S21s fail due to being poorly incompleted or poorly served so they are thrown out in court and the landlord has to start again.

Also, some tenants contest that they have received it so there is general advice that the landlord should have proof that its been sent (no requirement to prove that the occupants have received it, as far as I know, since this would give nearly every tenant the excuse to say they didn't get it).

Best scenario is that you have filled it in correctly and have proof that it is sent and that on the 2nd of February, you can contact the court to get the case heard. This might take quite a few weeks to reach court due to the usual local backlog.

Also, a positive step would be that your parents have so firmly stuck their head up their own a*r*s*e that they don't try to contest it and don't turn up in court or respond to it as they think that rent free agreement magically protects them from every eventually. Judge would then just give you the judgement in your favour.

Personally, I would think they would finally buck up and try to defend themselves. As far as I know, there is not a defence procedure available to occupants though the judge can grant extra time before the possession order comes into effect.

You could always move into the property if the S21 succeeds (I think you are going to have to return back to court to get a bailiff to enforce it if you win. I would also think your parents would go running to the local press to denounce you).

Let us know how you get on.

Why does your solictor think the rent free agreement will mean the judge won't grant the PO?

BigAunty

ScorpiondeRooftrouser wrote: »

I arrived at that figure because that what she says the house was valued at at the time. Subsequent depreciation does not affect that that was the deal on offer at the time the deal was done. That depreciation is the problem of the current owner of the house, just as any subsequent appreciation will be to her benefit.

Also, the equity for the transaction between daughter and parents is based on the price she paid them, and not the size of the mortgage she took out. As she kept £50K of that it affects the equity between the value of the house and the mortgage, but not the equity that was passed to her in the deal that was struck between her and the parents. Again, if she extended the mortgage by 50K now, it would not affect the deal she struck then. it is exactly the same situation.

The technical definition of equity is " the residual interest in the assets of the entity after deducting all the liabilities." For home ownership, this can be summarised as the difference between the home's market value and the outstanding balance of all liabilities, such as the outstanding balance of the mortgage, on the property.

Current value minus property related debts, that is it.

This is a moving feast, not a static sum - what the equity was at the outset is completely redundant now. It's what could be realised upon a sale NOW. That's how equity operates, I think you are just hung up on historic values and why the gain to the OP is vastly exaggerated.

ScorpiondeRooftrouser

BigAunty wrote: »

The technical definition of equity is " the residual interest in the assets of the entity after deducting all the liabilities." For home ownership, this can be summarised as the difference between the home's market value and the outstanding balance of all liabilities, such as the outstanding balance of the mortgage, on the property.

Current value minus property related debts, that is it.

This is a moving feast, not a static sum - what the equity was at the outset is completely redundant now. It's what could be realised upon a sale NOW. That's how equity operates, I think you are just hung up on historic values and why the gain to the OP is vastly exaggerated.

No...the gain to the OP from this transaction was the gain AT THE TIME she bought the house. That's what the fairness or otherwise of the deal relies on.

What she could realise on a sale now is an entirely separate thing. That could change tomorrow. This is a gain or loss based on the fluctuation of the market, NOT based on the original transaction.

If my house is worth £10,000 more than when I bought it, I didn't make that gain by buying it. I made that gain from the market.