bankruptcy clause on lease

bricktop_2

i recently tried to staircase and buy the remaining shares in my shared ownership property,i was told by the housing association that was ok so i went ahead,it was painfully slow optima legal ended up as my solicitors through a deal with a mortgage broker
it all ended with optima stating
we are unable to proceed with the mortgage transaction
As part of the staircasing transaction you were to receive a transfer out of the headlease title of the housing association.Your property would then be subject to the terms of this lease
unfortunatley one of the terms in the lease is not acceptable for halifax to lend on.There is a condition in the headlease that states that during the term if the lessee shall become bankrupt or shall enter into an arrangement or composition for the benefit of its creditors it shall be lawful for the council at any time thereafter to re enter the premises and the terms shall absolutley cease and determine
we have contacted the housing association solicitors to see if they will request a variation of the lease between them and the council but the request has been unsuccessful
i dont know what to the person at the housing association had no idea what i was talking about and just kept repeating you will need a solicitor to look at this
can i sell my share and get out or will this clause pop up again if someone wishes to purchase my share of the house

Michelle2014

I am not a legal expert but it sounds like the lease doesn't meet the requirements of Halifax. I am going through something similar at the moment with Nationwide and our Shared Ownership lease (we are doing a remortgage). My understanding is different lenders have different requirements with regard to Shared Ownership leases so another lender may be willing to lend.

bricktop_2

Thanks for reply,that sounds positive i have asked the housing association if i can sell and if they agree i will,i don't want to reach the point of selling and get knocked back by this clause rearing its head and the sale going into meltdown,a few people have lived here prior to ourselves and it has been sold successfully prior to us buying it

stator

So who is your current mortgage with?
That seems like a pretty bad clause to have, I don't see how anyone would lend against it. As I understand it if you declare bankruptsy the council can take the whole house back and the mortgage lender would be left with nothing?
You could try badgering the council about it. Get your councillors involved and even your MP.

Senior_Paper_Monitor

Occasionally contract terms do cause a deal to trip over at a late stage - frankly there is no way that a broker or solicitor can identify such issues until late in the process.


That said Optima Legal are absolutely the last solicitor I would want handling any arising issue for me ! But this is probably in no way their fault - although the timescales involved may well be.


I think it unlikely that, with the established positions of this lender and this housing association, there is going to be any resolution between them.


However, this may not apply to every lender - with the 'problem clause' identified it should be possible for your broker to establish if there are any other lenders who will be happy with it (and see whether this is a CML - Council of Mortgage Lenders - driven issue, or an internal Halifax one. If the latter, then there is more hope). It would not be unreasonable for the mortgage broker to agree a fee with you for such work.


If it was a proper recommended solicitor with whom the broker had a relationship (rather than a conveyancing factory selected on the basis of kick back from one of the many introducer panels available to us) it might be possible to identify which other lenders could be expected to accept the clause in his/her experience - but I very much doubt that will occur with Optima.


It may be possible for you or the broker to find out from the legal department of the housing association if they have had this problem previously and which (if any) lenders have accepted it recently.

bricktop_2

This all happened in march optima just contacted me and asked if i was aware of this clause,i said sadly due to being a bricklayer i don't come across this sort of clause on a regular basis,they then stated we can't carry on with the staircasing,the mortgage adviser promptly wanted no more to do with it so i was left as i was prior to this happening,my mortgage for the 50% share is with nationwide
i just want to sell and get out really

Senior_Paper_Monitor

It is in your interest to get to the bottom of this or there is a danger of the 'new buyer' facing the same unexpected problem late in process and letting you down.


I find it hard to believe that a clause exists in isolation with the impact you suggest - effectively attempting to turn over the first charge mortgage (not going to be accepted by any lender) - and suspect this is a matter of (mis)interpretation

bricktop_2

i totally agree i don't want a new buyer facing this as much as i want to sell,i don't know if i am the first person to attempt to staircase on this property or if it has been attempted by other owners before and they came to this conclusion and just sold it on,could it be a clause in favour of the housing association so that it can never be fully sold and they still regain the 50% share?

Senior_Paper_Monitor

I have no way of telling without sight of original and full documentation - get hold of that documentation from housing association and/or Optima Legal (good luck with that one !!).


Pay an independent solicitor to advise - or broker to float across lenders. The choice is yours.

bricktop_2

i have forwarded the optima message to the housing association and asked them directly if i can sell my share,i await their reply during the week