Secured loan not so secure???

Sid1978

Hello all,

My wife and I have sold our house! Hooray! :beer:

We had 2 secured loans on our property. I will not disclose company names, but will call them Company 1 and Company 2.

Company 1 did NOT put a charge against my house when the loan was taken out - I have no idea why?!?! Company 2 did.

To complicate matters, Company 1 then sold the loan to Company 3. Company 2 also sold their loan to Company 4! :shocked:

My solicitors have sent me a letter asking for loan details for Company 2 (now Company 4) but not Company 1 (now Company 3). (Keeping up??)

I have called the solicitors to give them the details of Company 3 AND Company 4 but as there is no charge against the property for Company 3, the solicitors, essentially, won't deal with them and will instead transfer that money into my bank with the rest of the money I will receive from the sale...

I am now confused to the state of the loan with Company 3...

So my questions are:

1. Is the loan still classed as a 'secured' loan?
2. Do I still have to settle the loan with Company 3, when I exchange contracts, albeit I will have to pay them directly from my account and not from the solicitors?
3. Does Company 3 have any recourse if I DON'T settle the loan and keep making my monthly payment?

Any advice will be greatly appreciated!!

Many thanks,
Sid1978

PS I know that settling the loan would be the best thing to do anyway, but I fancy a holiday!! :rotfl:

davidmcn

It's a loan, the fact they don't have a security to enforce doesn't make any other difference. You owe the money.

Sid1978

I know I owe the money. Thanks for that helpful reply. I fully intend to repay - I want to know if it's secured or not and what my options are from a legal standpoint.

davidmcn

Sid1978 wrote: »

I know I owe the money. Thanks for that helpful reply. I fully intend to repay - I want to know if it's secured or not and what my options are from a legal standpoint.

Ok, it wasn't clear from your post whether you thought there was some cunning loophole! If there isn't a security then it isn't secured. It's possible your loan agreement says that you would provide an acceptable security. The fact you're selling the property over which there ought to have been a security is unlikely to trigger anything (though we don't know when you are meant to repay it according to your loan agreement).

Also, your change of address might cause them to query what's happened to their security (if they're paying attention).

molerat

If the loan agreement states that you are contractually obliged to repay the loan on sale of the property then there is the possibility that, if they learn of the sale, they could try to enforce that in the courts. The charge on the property is usually a way of safeguarding and automatically applying that clause. So what does the agreement actually state ?

G_M

good grief!

There is one charge on the property (company 2 now company 4), so your solicitor needs to deal with this by paying off the loan with the sale money, and getting the charge removed.

Company 1 (3) did not put a charge on the property (for whatever reason- does not matter), so the conveyancer can ignore this.

Contacting company 1, or 3, seems daft. Why stir up a potential hornets nest? Just continue whatever regular payments you have for company 1 (3), and do nothing more.

If at some time in the future compay 1 (3) raises an issue, deal with it then. Until then, you will continue to owe them the loan so bear that in mind when making any future financial plans.

Miss_Samantha

Sid1978 wrote: »

I know I owe the money. Thanks for that helpful reply. I fully intend to repay

Well, you did ask if you in effect had to pay.

Sid1978 wrote: »

I want to know if it's secured or not and what my options are from a legal standpoint.

A secured loan where the security no longer belongs to the debtor is no longer secured, is it?

That's why secured loans usually use real estate property: you can put a charge on the property. The alternative is the 'pawn shop' model where the creditor securely keeps the security.

You need to check the terms of the loan for what you should do, which, I suspect, is to immediately pay off the loan.

Grant_Urismo

Is there any reason not to level with company 3? I'd be inclined to tell them exactly what the situation is, and offer to either keep paying monthly or settle in full, whichever they prefer. Given that they probably want to keep raking in interest payments, I expect they will go for the latter.

da_rule

If the charge is not registered then the loan is not secured against that property.

At the very least you're going to have to tell company 3 that you've moved address, which may alert them to something having gone wrong.

Personally, I would just approach them and ask. There may have been an option in the agreement for them to make it a secure loan and they just didn't take that option. Worst case scenario if you contact them now is that you have to pay the outstanding balance back. Worst case if you don't come clean with them and are in breach of your contract, court, legal costs, and having to repay the amount.

They may also be happy with you keeping up what ever payment schedules you have in place.

mo786uk

davidmcn wrote: »

It's a loan, the fact they don't have a security to enforce doesn't make any other difference. You owe the money.

Of course it does - he can spend all the money on coke and it it will make it a lot harder for them to extract the money out of him.

davidmcn

mo786uk wrote: »

Of course it does - he can spend all the money on coke and it it will make it a lot harder for them to extract the money out of him.

But they've never had a security - he could have spent the money on coke on day one!