Second Charge Mistake

Keviola

Hi folks,

I would really appreciate some advice. My wife and I took out a Momentum Mortgage with the Ulster Bank in 2009. This basically allowed us to purchase our home with the developers paying the 5% deposit. This would not be payed back if the value of the house did not rise by atleast a 5% and it also entitled us to a 10% reduction in our mortgage if the house price dropped after the initial 5 year tie in period, again paid for by the developers. In turn, the developers held a second charge on our property for this period.
After 5 years the Ulster Bank arranged a valuation and this found that the house price had dropped. Our mortgage was reduced by the agreed amount and a letter was sent to say that the second charge would be removed.

Now, 2 years later, we are in the process of selling our current home and buying a new one. We are on a right deadline as our new property can not start to be built until we have exchanged contracts on our sale. 3 weeks ago we found out that despite everything that had been done, the second charge was never lifted. The bank have fully admitted that this is their fault, however the developers are now querying the legalities of what they signed up to initially and are refusing to remove the second charge.

Obviously this has put us in a position where, through no fault of our own, we are close to loosing both our sale and purchase as the bank cannot give us a timescale for how long it will take to remove it. I have put in an official complaint and contacted the financial ombudsman to data to. However I am hoping that someone might have some further suggestions for what can be done?

Thanks for any help that you might be able to give!

eddddy

Does your solicitor have a view on this?

As a starting point, I'd be tempted to put the developer (and/or the lender) on notice that they are in breach of contract. i.e. They are not sticking to the terms they agreed, which is that they would remove the charge.

And warn them that your consequential losses are likely to be significant...

- If you lose your buyer, there is no guarantee that you would find another buyer who would offer the same amount.
- And if you lose your purchase, you may have to pay more to secure a different equivalent house.

... and you will be claiming damages from them.

MacMickster

Don't rely on anonymous users of an internet forum for advice about this.

This is definitely an issue where you should be talking to your solicitor, and let them talk to your lender and the developer.

Good luck.

Keviola

Thanks for your quick replies. I have updated my solicitor this afternoon via email and fully intend to speak with him tomorrow. As this has been such a stressful day, I was hoping that someone here could offer some sort of advice in the mean time if they have had experience of a similar issue. The bank have said they will be trying to force the removal of the second charge without consent, which I image will only happen through the courts. Unfortunately we need to have the issue resolved as quickly as possible. Does anyone know of another avenue we, our solicitor or the bank could be exploring instead?

Bossypants

Keviola wrote: »

Thanks for your quick replies. I have updated my solicitor this afternoon via email and fully intend to speak with him tomorrow. As this has been such a stressful day, I was hoping that someone here could offer some sort of advice in the mean time if they have had experience of a similar issue. The bank have said they will be trying to force the removal of the second charge without consent, which I image will only happen through the courts. Unfortunately we need to have the issue resolved as quickly as possible. Does anyone know of another avenue we, our solicitor or the bank could be exploring instead?

Since the bank has admitted fault, I would be pushing for the bank to make you whole, i.e. put you in a position where you are able to proceed as you would had this not happened, and then they can sort out the mess in their own time. I am not sure how this would work in practice with property, but in your place I would definitely ask my solicitor to push the point.

Edit: Having thought about it, I guess what the bank would potentially do is pay you the market value of your equity now, and then put a charge on the property so that you get nothing when a sale does go through. Just speculating though, I have no practical experience in this area...