Advice on eviction

BigAunty

ScorpiondeRooftrouser wrote: »

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.

No, you have no grasp of the concept of equity. Nothing to do with fairness and everything to do with what the property is now worth.

The time when there was significant equity in the property has been and gone. It is a useless concept unless it relates to a sum that can actually be realised through a sale. Since the past has vanished and who knows what the equity will be in the future, this leaves us with the actual definition of equity, the valid one, relating to the present time.

A person who bought a property in the boom in 2007 for 150k with a mortgage of 130k had 20k equity in the property THEN. If they've paid down their mortgage to 125k NOW but the current fair market valuation is 120k (because of the subsequent price crash) then they are in NEGATIVE equity by 5k. It is no use them wandering around saying 'I have 20k equity in the property because that's what I enjoyed 6 years ago', they actually have 5k in negative equity.

This is why the OP does not have 150k equity.

http://www.businessdictionary.com/definition/home-equity.html

Somerset

BigAunty wrote: »

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.

Actually, I hate to tell you the bad news but .........


If, and I emphasise if, the rent free agreement is valid


If, the mortgage company are aware of it or subsequently recognise it.


It is part and parcel of the property and goes with the property. It is not 'attached' for want of a better word, to the borrower (the OP).


You earlier said :


There's no way a professional landlord would take on tenants for the rest of their natural life who won't pay a penny so they'd either have to evict them or get them to sign up for a standard AST


Not sure many landlords would be tempted by the scenario that the OP outlines of tenants that feel they shouldn't have to pay rent. I imagine most landlords would prefer vacant possession but if they did have the appetite to secure a £190k property for around £155k for the loss of few months rent during the eviction process, then perhaps that's possible.


But if she can't afford to and they won't contribute, then its homelessness for the parents and debt for the daughter, agreement or no agreement. The agreement isn't worth the paper its written on if the OP cannot find £700 per month for the next 20 or so years




Apologies, I can't go 'advanced' atm, so can't quote.


All of the above is incorrect.


If the parents are 'life' tenants at nil or peppercorn rent ( assuming they can prove that ) any sale will take place with that tenancy in place.

You cannot remove it or change the terms. Or replace it with an AST etc.

And yes, these properties do come to market with precisely these tenancy terms, which have to be adhered to, at a substantially reduced hammer price.


Scenario : property repossessed by lender, tenants submit life tenancy/nil rent agreement, legal eagle's review it (since it's news to the lender) it's either legal or not. Property goes to auction, is sold at a much reduced %, lender pursues OP for full shortfall and costs, parents stay in house on previous terms with new landlord.


Crux is, is the tenancy agreement valid - life tenancy/no rent.

BigAunty

Somerset wrote: »

Actually, I hate to tell you the bad news but .........


If, and I emphasise if, the rent free agreement is valid


If, the mortgage company are aware of it or subsequently recognise it.


It is part and parcel of the property and goes with the property. It is not 'attached' for want of a better word, to the borrower (the OP).


You earlier said :


There's no way a professional landlord would take on tenants for the rest of their natural life who won't pay a penny so they'd either have to evict them or get them to sign up for a standard AST


Not sure many landlords would be tempted by the scenario that the OP outlines of tenants that feel they shouldn't have to pay rent. I imagine most landlords would prefer vacant possession but if they did have the appetite to secure a £190k property for around £155k for the loss of few months rent during the eviction process, then perhaps that's possible.


But if she can't afford to and they won't contribute, then its homelessness for the parents and debt for the daughter, agreement or no agreement. The agreement isn't worth the paper its written on if the OP cannot find £700 per month for the next 20 or so years




Apologies, I can't go 'advanced' atm, so can't quote.


All of the above is incorrect.


If the parents are 'life' tenants at nil or peppercorn rent ( assuming they can prove that ) any sale will take place with that tenancy in place.

You cannot remove it or change the terms. Or replace it with an AST etc.

And yes, these properties do come to market with precisely these tenancy terms, which have to be adhered to, at a substantially reduced hammer price.


Scenario : property repossessed by lender, tenants submit life tenancy/nil rent agreement, legal eagle's review it (since it's news to the lender) it's either legal or not. Property goes to auction, is sold at a much reduced %, lender pursues OP for full shortfall and costs, parents stay in house on previous terms with new landlord.


Crux is, is the tenancy agreement valid - life tenancy/no rent.

You make good points but as far as I'm aware the OP mistakenly bought her property with a conventional residential mortgage rather than a buy to let mortgage (could the OP please confirm?).

So if she did not get authorisation from the lender for a buy to let, I doubt that mortgage company consented the lifetime free rent agreement or were aware of it, particularly as the father drew it up some months after they had moved in (can the OP please confirm)

If that was the case, it would mean creating a loophole whereby people bought properties for relatives, created a rent free agreement and cared little if it was repossessed on the expectation that the lender would pick up the tab for this - it would be enough to bring a lender down.

I am not legally qualified but I think there are two separate legal issues here that might need to be addressed separately but hopefully the OP can seek legal advice again - 1. the agreement for rent free living between daughter and parents. 2. the agreement between daughter and lender (the mortgage). I don't see that there's a triangle there with a relationship between lender and her parents.

Also, the parents haven't paid a penny in rent so the posters here wonder if they are excluded occupiers or whether that AST that they filled in does indeed make them tenants or whether it is an empty document because no rent has changed hands. Hard to know. If they insist that they live there rent free,they are excluded occupiers (which, if the rent free agreement doesn't change their rights) means they can be easily evicted. If they insist they have a valid tenancy (and the rent free agreement doesn't change their rights), then they are also easy to evict. Will take a legal expert to verify - this is a very complicated case.

The only private tenants that I know to be extremely hard to evict are secure/assured tenants. These are tenants that have been in place for many,many years, before the changes to the law on eviction that followed the Rachman scandals, and have never signed a subsequent AST.There are very few of those remaining. Happy to be challenged on this.

http://en.wikipedia.org/wiki/Assured_tenancy

Rocky99

He didn't really look at it, he was more concerned about this 'contract' than anything. It was delivered by recorded delivery. I gave them over two months about 10 weeks and the 1st was the deadline. I used a s21 from the net

BigAunty

Rocky99 wrote: »

He didn't really look at it, he was more concerned about this 'contract' than anything. It was delivered by recorded delivery. I gave them over two months about 10 weeks and the 1st was the deadline. I used a s21 from the net

Shame it wasn't checked because if it gets thrown out for admin/serving errors, you have to start from scratch again which could add quite a few months onto the eviction process. Just very small details missing or wrong on the form will see it tossed.

Do you have proof they signed for it? Recorded delivery is strongly disencouraged in case the tenant refuses to take the document (see info on link below).

Your solictor thinks the eviction process will fail anyway but I'm still curious as to why that rent free agreement should negate the process? It might, just curious to know if he cited any case law on it.

"Using the section 21 procedure to gain possession of your property should always be the preferred method because, providing all your paperwork is in order, you are guaranteed to get a possession order."

See the advice here on how to complete it - does it tally?

http://www.landlordzone.co.uk/content/section-21-notices

You could always contact Shelter by email, posing from your parents perspective to say that you live in your relative's property (but your former home) and that you've got a signed agreement to live there rent free for the rest of your life and would that be a protection from eviction via the S21 process as your relative can no longer afford to pay the mortgage. Shelter do not give advice to landlords. That's being quite cheeky and naughty though but it does mean that you get a handle on what options are open to your parents and could form part of your advice to them.

Somerset

BigAunty wrote: »

You make good points but as far as I'm aware the OP mistakenly bought her property with a conventional residential mortgage rather than a buy to let mortgage (could the OP please confirm?).

So if she did not get authorisation from the lender for a buy to let, I doubt that mortgage company consented the lifetime free rent agreement or were aware of it, particularly as the father drew it up some months after they had moved in (can the OP please confirm)

The only private tenants that I know to be extremely hard to evict are secure/assured tenants. These are tenants that have been in place for many,many years, before the changes to the law on eviction that followed the Rachman scandals, and have never signed a subsequent AST.There are very few of those remaining. Happy to be challenged on this.

On the first point, the mortgage, I think it's inconceivable the lender was aware of the situation. But they may still be tied to the OP's actions.


There are two separate issues :
1) Did the OP issue/sign a life tenancy/nil rent agreement.
2)- Did the OP not disclose to the mortgage company a) the existence of said agreement b) the gifted deposit and c) class it as a residential as opposed to commercial mortgage.


2) doesn't invalidate 1). However 2) leaves the OP open to all sorts of repercussions from the lender, apart from the shortfall on sale.


The secured/assured are indeed a 'type'. However the life tenant on a nil/peppercorn also exists. I bought one myself many year's ago.


Seriously, the crux is whether the life tenancy/nil rent agreement is valid. The original sale from parent to daughter either did or didn't contain that covenant. How the daughter funded that purchase is entirely separate .... and personally I think there could be a whole heap of trouble relating to the non-disclosure re that funding.

RAS

the OP has already stated that dad produced the life tenancy agreement 3 months after the sale was processed. So the mortgage providers were not involved ( and no solicitor)

At the time of the mortgage, the idea seems to have been to move in with the parents? So it was residential?

ScorpiondeRooftrouser

BigAunty wrote: »

No, you have no grasp of the concept of equity. Nothing to do with fairness and everything to do with what the property is now worth.

The time when there was significant equity in the property has been and gone. It is a useless concept unless it relates to a sum that can actually be realised through a sale. Since the past has vanished and who knows what the equity will be in the future, this leaves us with the actual definition of equity, the valid one, relating to the present time.

A person who bought a property in the boom in 2007 for 150k with a mortgage of 130k had 20k equity in the property THEN. If they've paid down their mortgage to 125k NOW but the current fair market valuation is 120k (because of the subsequent price crash) then they are in NEGATIVE equity by 5k. It is no use them wandering around saying 'I have 20k equity in the property because that's what I enjoyed 6 years ago', they actually have 5k in negative equity.

This is why the OP does not have 150k equity.

http://www.businessdictionary.com/definition/home-equity.html

Please stop repeating yourself and read what I am saying.

I KNOW the OP doesn't have that equity NOW. That's why I said "The gain to the OP was £150K of equity in the house (variable with the market)".

That doesn't change the fact that the equity she gained in the house AT THE TIME OF THE TRANSACTION is the only figure RELEVANT TO THE TRANSACTION.

It's nobody's business but hers that the equity will change after the transaction has completed. That has nothing to do with the deal between her and her parents.

BigAunty

ScorpiondeRooftrouser wrote: »

That doesn't change the fact that the equity she gained in the house AT THE TIME OF THE TRANSACTION is the only figure RELEVANT TO THE TRANSACTION.

.

She didn't gain any equity at the outset - to realise the equity it would have to have been sold again. Equity is about now, the current situation.

If you are trying to say that she owes her parents a significant sum because the property was overvalued at the time and has depreciated in value and was bought at less than cost with her parents consent, then where is the legal agreement that stipulates that she owes her parents this sum? Fine but don't use the word equity as its inappropriate.

The only agreements that I know to be in place is a badly scribbled note to say the parents can live there rent free, a lost AST that relates to their HB submission and the mortgage agrement (of the wrong type as the OP has one for owner occupation, not for a landlord which she is). That's enough bad contracts for any household....

She has no direct financial liability for the dip in value that comes from their orignally a mutually agreed sale if she sells it in the near future (as far as I'm concerned) but her parents could always try to contest this.

There appears to be no verbal or written contract that obliges the OP to pay back the original value of the property because both parties were dumb enough to proceed with the risky venture without considering that the property may have to be sold. It will remain this way until perhaps a judge makes a judgement to say otherwise.

ScorpiondeRooftrouser

BigAunty wrote: »

She didn't gain any equity at the outset - to realise the equity it would have to have been sold again. Equity is about now, the current situation.

If you are trying to say that she owes her parents a significant sum because the property was overvalued at the time and has depreciated in value and was bought at less than cost with her parents consent, then where is the legal agreement that stipulates that she owes her parents this sum? Fine but don't use the word equity as its inappropriate.

The only agreements that I know to be in place is a badly scribbled note to say the parents can live there rent free, a lost AST that relates to their HB submission and the mortgage agrement (of the wrong type as the OP has one for owner occupation, not for a landlord which she is). That's enough bad contracts for any household....

She has no direct financial liability for the dip in value that comes from their orignally a mutually agreed sale if she sells it in the near future (as far as I'm concerned) but her parents could always try to contest this.

There appears to be no verbal or written contract that obliges the OP to pay back the original value of the property because both parties were dumb enough to proceed with the risky venture without considering that the property may have to be sold. It will remain this way until perhaps a judge makes a judgement to say otherwise.

Of course equity is not only "about the current situation". My house had £10,000 equity in 2005, it has £20,000 equity now. Only the CURRENT equity is about the current situation.

In this case the current equity is relevant if she is looking to sell the house today,and the equity at the time of the sale is relevant to considering whether or not it was a fair deal at the time.

This really isn't rocket science.