House being repossessed and a gifted deposit is at stake

Darkladyv

Hi, I am asking this on behalf of my Mum as she is in a bit of a pickle.

My Mum lent my brother a large deposit after the sale of her house, in order to help him and his wife to buy a house of their own. Some time later, my brother and wife moved out of the country suddenly due to a change in my sister in laws family life and they needed to be there to sort it out.

They had a lodger in their property for a few years, but after losing them, the house is now being repossessed due to failed mortgage payments and is being sold at £14,000 below what they bought it for.

My question is, what can my Mum do now? She's got a large amount of money that is tied up in the house and the agreement was that they would pay her back after 10 years, which is now up. But instead, the house is going to be repossessed and sold at a much smaller price and she's convinced that she will lose all the money.

It's pointless asking my brother for it as he doesn't have it and has a large family and a life in another country, but what can she do with the banks? Is there any protection? I don't know if they got it legally written up or not, but that was my Mum's security and I think she's panicking as it was also security for all of us kids in her will, and not just my brother, but it's at stake now.

Any advice, good or bad, would be appreciated!

Thank you.

ACG

Was the deposit gifted or lent?
What does the paperwork say?
Is there a contract in place?
Ultimately, the Mortgage lender has first charge on the property. They get their money first. If there is any equity then your mum could potentially put a claim in on that (if there is something in place to show it would be paid back). If there is not enough equity in the property to cover the Mortgage and the costs associated for repossession (which can be thousands), I think your mum has probably lost that money.

It could be worth having a quick chat with a solicitor. If your mum has legal cover on her buildings insurance then it may be able to help?

foxy-stoat

Nothing good here.

It was a gifted deposit so she has zero chance of money from the house sale - from the lenders point of view.

Morally your brother should pay her back but if he doesnt have the money then he cant, if he does then he should, but probably wont.

Brock_and_Roll

OP,


What is the maths here?


Let's assume for now that the original property price was £300k with a 20% (£60k deposit) provided by your mum.


If that was the case, the bank lent £240k


You say that price is being sold (is that the asking price or agreed price?) for £14k less than the purchase price (£300k - £14k) = £286k.


So on paper with these numbers, your mum would get (via your brother), 77% of her loan/gift back.


However, there were presumably arrears in the run up to repossession and there will also be significant costs charged by the lender.....if there are £15k of these then she is looking at only getting half her money back. (she can then make a codicil to her will so make it clear that the brother has had his share)

davidmcn

Either the brother can afford to repay or he can't. Unless he gets a surplus coming back to him following a repossession sale (which is more common than you might imagine) then I wouldn't have thought there's any foreseeable likelihood of him being able to repay, if he can't even afford his mortgage payments.

If the loan had been secured then mum gets first bite at any surplus after the main lender has been repaid, without having to go via the son.

And all this presumes that there's no argument about the "gifted deposit" actually being a loan...

RubyHouse

As above, if this was a gifted deposit and submitted as so at the time of the mortgage application, your mum will have stated the money was a gift, does not need to be repaid and does not allow your mum to have any stake over the house.

If there is any money left after sale, she would need to pursue your brother for the money.

stator

A gifted deposit is a gift and not a loan.
She probably signed a bit of paper saying it was a gift and not a loan.
The bank will sell the house, pay off the mortgage and forward any surplus to your brother. He can do what he wants with that surplus, if there is any. If there is a deficit your brother will still own the bank money.
There is nothing your mother can do, if it was a gifted deposit.

tacpot12

If the agreement was that they would pay her back after 10 years, then the money was a loan, not a gift. If it was important that she got the money back, your mum should have put a second charge on the house - she may have done this; as you say, you don't actually know whether the loan was done with a solicitor being involved. Even with a second charge, the mortgage company will (via its first charge) receive all the money it is owed plus its costs.

Can your brother still try to sell the property? If so, this might produce more surplus. Morally, your brother should receive nothing from the sale of the house until your mother has received her money back, but there is no way to enforce this; his morality is all you have. Let's hope your mother brought him up to be a good boy!

Edi81

It!!!8217;s the same as saying !!!8220;you know that birthday gift I gave you 5 years ago....I would like it back now!!!8221;.

Your mum is not going to get her money back easily if at all.

Thrugelmir

Darkladyv wrote: »

My Mum lent my brother a large deposit after the sale of her house, in order to help him and his wife to buy a house of their own.

But it was a gift according to the post title?

foxy-stoat

OP come back - or you will may get claims due to posting a mis-title.