Mortgage and ownership query

kingfisherblue

A question for a friend. He is one of four. I'll call them Tom, Sam, Jim, and Bob.

Tom and Sam took out a joint mortgage twenty years ago, for the house their parents live in. Parents could not get a mortgage themselves. Tom paid mortgage for fifteen years, with some irregular contributions from Sam. Money was paid in cash from personal current account to joint account held by Tom and Sam for this purpose. Mother took cash to bank to pay it into joint account each month.

Parents have been paying mortgage for last five years. None of the children live with parents any more - they are now in their 40s.

Tom and Sam don't know if they are on the deeds. I have emailed link to Land Registry so that this can be checked. They are happy for their parents to continue living in the house, but would like a larger share of the property than their brothers when their parents die, to reflect that they took out a mortgage and paid it for so many years. Tom is aware that Sam is likely to have equal rights as joint mortgage holder, even though Tom has paid considerably more.

Parents say that house will be left to Jim and Bob, or possibly split equally between the four brothers. Jim has told Tom that he is terrible for wanting to claim a larger share, and refuses to communicate with him in any way, about anything.

Tom is planning to contact the Land Registry and knows he will also have to see a solicitor. He has all financial records. He feels that through naivety and trying to help his parents, he is now in a very poor position.

Can anybody offer any advice please?

(And yes, this really is for a friend. I'm happy to say that my mortgage is a lot less complicated!)

davidmcn

If the mortgage was in Tom & Sam's name then (almost certainly) so is the house. And if it's already their house, their parents can't leave it to anyone in their Wills, because they don't own it.

kingfisherblue

Thank you. That was my thinking, but when I asked Tom if his name was on the deeds, he did not know. He's never heard of the Land Registry until today. He feels that his parents may have taken advantage of him.

Presumably I am correct in thinking that his parents could not either get a mortgage on the property themselves, or transfer their own names onto the deeds, without permission from both Tom and Sam? And that permission would have to be in writing?

Unfortunately Tom did not take legal advice at the time, and is unsure of exactly what he signed.

m0t

A mortgage company is unlikely to lend money to someone to buy a property that someone they don't have a relationship with owns. It's therefore highly likely they are on the deeds.

Have they checked to see if the title plan is available on the Land Registry's website? It will list the owners and be much quicker than emailing, for £3 it will very quickly identify how much of a problem they have.

Land_Registry

Your OP suggests in some ways that the parents may be registered, took out the mortgage (somehow) and the sons gave them the monies to pay the monthly amount.

A lender would be unable to secure a mortgage against the property without the registered owners being included as the borrowers in the legal charge (mortgage deed)

We don't email you the details re ownership and you can check online - the register will confirm the owners details and also who any mortgage is with

kingfisherblue

Hello again, and thank you for your replies. Tom has now downloaded the Land Registry document, which states that Tom and Sam are the registered owners. The mortgage lender is also listed.

The mother collected cash from Tom and Sam, then paid it into a joint account held by the two brothers, as a way of controlling them.

Tom is very relieved to find that he and Sam are the registered owners. However, it does open up a further can of worms. Neither brother lives in the property any longer, and have not for some time. Tom lives with his partner, who owns a house. I don't know about Sam. They did not inform the mortgage company that they were moving out. The house is still occupied, though, by their parents.

Parents are paying the mortgage and buildings insurance. They have never been asked for, or offered, any rent to Tom and Sam, as they see themselves as the owners. Are they tenants? Should Tom and Sam have informed the mortgage company? Do they need landlord insurance?

Parents have told Tom that they want him to take his name off the mortgage as they are now paying it. Tom has refused, and I doubt it would be that simple anyway. I would imagine that someone else would have to be named. Tom wants to retain whatever rights he has, even if he has to take over paying the mortgage again.

Dad has told Tom that he has nothing to do with the house, and has no claim on it (clearly untrue), and changed the locks following a family disagreement regarding ownership of the house. Jim feels entitled, as he paid his parents money to live there for about a year after leaving school - I pointed out to Tom that my daughter paid board to me, to cover utilities and food, and that is what Jim is likely to have paid.

Sam is being uncommunicative about the whole situation. He said at one point that he had taken his name off the mortgage at the request of his parents, but has recently admitted that this was not true. He seems to accept that his parents own the house (though this may change when Tom shows him the Land Registry document).

So sorry to add further questions, but Tom is rather concerned about pressure from his family. He is also worried that he owns (albeit jointly) a house that he does not live in, and does not currently pay the mortgage for, but has not informed the mortgage company or HMRC (in case he needs to pay any tax).

Any further help is very much appreciated.

kingstreet

Land_Registry_representative wrote:

lender would be unable to secure a mortgage against the property without the registered owners being included as the borrowers in the legal charge (mortgage deed)

Don't forget that weird charge arrangement HSBC has where you can have more proprietors than mortgagors (eg sole borrower, joint proprietor).

It does come up on here from time to time and it's the only one of its type left.

kingfisherblue

kingstreet wrote: »

Don't forget that weird charge arrangement HSBC has where you can have more proprietors than mortgagors (eg sole borrower, joint proprietor).

It does come up on here from time to time and it's the only one of its type left.

HSBC are not the mortgage company

Land_Registry

kingstreet wrote: »

Don't forget that weird charge arrangement HSBC has where you can have more proprietors than mortgagors (eg sole borrower, joint proprietor).

It does come up on here from time to time and it's the only one of its type left.

There are a variety of ways of borrowing money but a sole proprietor/joint proprietor scenario would not secure that loan against the property as a registered legal charge. That has always been the case - I've searched the forum for previous mentions but nothing was revealed so would be interested to read the details?

A registered legal charge (what most refer to as a mortgage) must include the important charging clause whereby the named borrowers charge the property (legal title). If all the registered proprietors are not included as borrowers then it cannot charge the legal title and be registered as a legal charge.

They might secure it as a notice or a restriction but it would not be registered in the same way as a registered legal charge and would not therefore have the same effect.

You can have more borrowers than proprietors but not the other way round.

kingstreet

Land_Registry_representative wrote: »

There are a variety of ways of borrowing money but a sole proprietor/joint proprietor scenario would not secure that loan against the property as a registered legal charge. That has always been the case - I've searched the forum for previous mentions but nothing was revealed so would be interested to read the details?

A registered legal charge (what most refer to as a mortgage) must include the important charging clause whereby the named borrowers charge the property (legal title). If all the registered proprietors are not included as borrowers then it cannot charge the legal title and be registered as a legal charge.

They might secure it as a notice or a restriction but it would not be registered in the same way as a registered legal charge and would not therefore have the same effect.

You can have more borrowers than proprietors but not the other way round.

I don't know how they do it; but I know they do.

My friendly solicitor who once handled one described it as a nightmare and said he would double his fee if asked to do another.

eddddy

kingfisherblue wrote: »

So sorry to add further questions, but Tom is rather concerned about pressure from his family. He is also worried that he owns (albeit jointly) a house that he does not live in, and does not currently pay the mortgage for, but has not informed the mortgage company or HMRC (in case he needs to pay any tax).

HMRC - it sounds like no rent is being paid, so nobody has a rental income, so HMRC won't be interested.

However, when the house is sold, Tom and Sam may make a capital gain, so CGT may be payable then.

Mortgage Co - Tom and Sam are probably breaching the terms of their mortgage.

If the mortgage co is alerted (or they start investigating due to non-payment etc) they might allow things to continue, or increase the mortgage interest rate, or even 'call in' the mortgage and/or repossess.

Leaving aside the moral issue, it might be best to say nothing and make sure the mortgage is paid each month, by someone.

Insurance - This might be a big problem, if whoever has taken out buildings/contents insurance has not answered the insurers questions accurately (about who owns the property, and who lives there).

If the house burns down, the insurers might refuse the claim and cancel the policy, if they find they have been misled.