Repossession - Title with no charge

manxlad

Hi

First time poster looking for some advice. We are currently going through a repossession on our property with HBOS. The property is made up of three separate titles. When we remortgaged in 2011 the solicitors some how made a complex horlicks of it and have only applied the mortgage to 2 out of the 3 titles.

The title which has not had the charge applied is a field with an approximate value of £10,000.

We have had a letter from HBOS' solicitors asking us to sign the land over to them as they believe selling the property without the land will cause a bigger shortfall for us.

What I would like to know is:

1. Am I correct that we own the land and there is nothing they can do about that?

2. What should we respond to the solicitors? My preferred approach is to tell them to offer the land as being available by separate negotiation.

3. How does shortfall work? Is it like a mini mortgage for the outstanding amount once the property is sold?

Thanks

Louk

In answer to your third question usually any shortfall becomes an unsecured loan for which you will both be joint and severally liable for (assuming as you are in your mortgage) meaning that if one of you were to default or go bankrupt the mortgage company would come after the other for the full amount.

magpiecottage

Is this in the Isle of Man?

The rules there used to be rather different.

silvercar

They can only repossess something if they have a charge over it. So you shouldn't agree to it without careful thought.

If there is a shortfall when the property is sold, they will expect you to come up with a plan to pay off the shortfall. Normally they expect that you have no ready cash (or the repossession wouldn't have happened in the first place) and will agree a repayment plan, as you say like a loan. However, they will often accept a lump sum payment in full and final settlement that is much less than the outstanding amount to close their books. Anecdotally 25% of the outstanding amount could be enough.

Of course, if they know you have a lump sum from the sale of the field, they will want this money. In negotiating terms, it may be better to keep it separate. As it is "only" £10,000 I don't know if they would go through the costs and hassle of taking you to court to get that money.

We have had a letter from HBOS' solicitors asking us to sign the land over to them as they believe selling the property without the land will cause a bigger shortfall for us.

Selling the property with the land does not require you to sign over the land to them. Keep it on separate title, sell at the same time and use the proceeds as a bargaining tool to try to walk away from the shortfall.

manxlad

Hi

Thanks for the replies.

No it's a UK property.

You seem to be confirming what we thought :-)

silvercar

Is this a voluntary repossession? ie you agreeing to hand the keys back. If so, there is the chance that they will refuse to possess if you don't agree to hand over the field. It depends how the numbers work out for them.

getmore4less

That £10k may swing them to bankrupt you and take the hit on the rest you owe them.

silvercar

getmore4less wrote: »

That £10k may swing them to bankrupt you and take the hit on the rest you owe them.

Can't see them doing that as the £10k would then be split amongst all creditors. The lender won't know your other debts, so won't want to run the risk.