Tenants in common & miss selling query

max70

I wonder if anyone could help please....
Two married relatives buy a house together. The two husbands have the mortgage as they were the two employed at the time. One couple separated and in the divorce he signed a document stating he has no interest in the house. He only wants to make sure their children have a home. All good so far.
The other couple, the husband retires and a while later the wife dies.
The mortgage continues to be paid and there are no arrears.
There are years left on the mortgage.
The retired widower wants to look to pay off or reduced the mortgage.
When speaking with the bank they discover for the first time the mortgage is not just between the husbands but shared with all four and it was a tenants in common, no joint tenants, meaning each one owns 25% of the mortgage and property.
The will of the deceased person had no mention of the property as she did not know she 'owned' any of it.
When the mortgage was taken out all four had no idea of the tenants in common, they thought it was joint tenants between the husbands. They also didn't know about the mortgage going over the one husbands retirement, as he never intended on working up to the end of the mortgage and was never told that was a requirement.
I wonder if this is an example of miss selling?
They are now in the position that they cannot make any changes or re-mortgage and any sale etc will now involve all 3 living and the estate of the deceased, which is a expensive nightmare.
Where can they go for help and should they be looking at miss selling too?

davidmcn

How long ago did they buy?
Who gave them advice about the mortgage?
They would (or should) have had advice from their solicitors about how title was going to be taken (which isn't necessarily the same as who is responsible for the mortgage payment - do they understand that?).
Surely they at least knew how long the mortgage term was? Why was that a surprise to the retiring husband?
It's not clear what practical difference any of this makes - presumably the widower is inheriting his wife's share anyway? What did the divorced couple believe happened to their interest(s) in the house at the time of their divorce?

max70

My understanding is everything was done through the bank/mortgage, and know categorically they didn't know about the tenants in common.
Unfortunately the wife left her estate to a relative as the person was consider responsible to make sure everything was dealt with properly, but at the same time had no idea about the property.
Whilst they knew how long the mortgage was for they did not know that this would be on the understanding the widower was staying in work until that time.
Ownership wise the widower has made provisions in his will that the other relative has his share of the house and then she would own it all, as does her ex-husband.
In effect it now means the widower only owns 25%, the relative 25%, the ex 25% and the estate of the deceased 25%.
This means the widower's will is incorrect - fine that can be amended. Where it gets messy is the property cannot be re-mortgaged and if it is sold then the profit is shared between all four and legally the estate and ex can do what they want with the money. I think at this point things can get a bit messy when actual money is involved. The estate and ex have to 'gift' their share of the money to the remaining relative, and with the widower will his 25% share that way the whole house then is the relatives as they believed it was anyone.
This has to be done through a solicitor and therefore will really costs and not something they are prepared for as they knew nothing about.

davidmcn

max70 wrote: »

My understanding is everything was done through the bank/mortgage, and know categorically they didn't know about the tenants in common.

The bank won't have done their conveyancing in-house, they surely used a solicitor at the time of their purchase? How long ago was this?

Whilst they knew how long the mortgage was for they did not know that this would be on the understanding the widower was staying in work until that time.

Why does that "understanding" matter? The bank can't prevent a borrower from retiring if they want to.

This has to be done through a solicitor and therefore will really costs and not something they are prepared for as they knew nothing about.

Certainly sounds like they misunderstood what they were doing, but they'll need more evidence that they were missold rather than misbought.

max70

The person who would have been able to answer this is the person who has passed away. The widower believed it was joint and all sorted as stated. The relative didn't know they had any part of the house/mortgage other than the ex signing his interest to her/children in the divorce and the ex has no knowledge and thought it was all dealt with. I will have a look for solicitors papers but there really isn't anything I can refer to. I didn't know if lack of knowledge and understanding would be worthy, like with the old PPI's?

davidmcn

It sounds like it's more to do with how they took title, which would have been something the solicitor dealt with. If they apparently can't even remember a solicitor being involved then I suspect they've just forgotten whatever happened. The onus would be on them to prove that there was negligence (or that the solicitor had failed to do whatever they were instructed to) rather than the converse.

max70

I will look for papers for the solicitor, hopefully the mortgage company may have the details on record from the application. I'll then speak to them and hopefully be in a position to sort out the paperwork/wills etc for them moving forward knowing where they are. Thank you for the help.

getmore4less

They are now in the position that they cannot make any changes or re-mortgage and any sale etc will now involve all 3 living and the estate of the deceased, which is a expensive nightmare.

Much simpler than you think for the deceased part of this when there are 4(now 3) legal owner on the land registry.

Remove the deceased owner from the land reg and the mortgage.
it does not need the involvement of the estate of the deceased at this point.

The three remaining owners can then act and deal with the mortgage or sell without the estate getting involved.
(Many believe you need probate you don't)

That just leaves the complication of the living ex partner.

......................................................
To deal with the deceased share of the property as it was not mentioned specifically in the will.
The beneficial interest will fall into the residual estate and any clauses that cover that.

If there was no residual estate clauses it falls into the intestate rules.

The default would be the spouse but depending on the value of the share and if there are kids it can get a bit more complicated.

getmore4less

there is a difference between legal ownership and beneficial ownership.

The legal ownership will now be the 3 living owners.
The beneficial ownership will depend on what has happened so lets deal with that

Where it gets messy is the property cannot be re-mortgaged and if it is sold then the profit is shared between all four and legally the estate and ex can do what they want with the money.

You said in your first post the ex has waived any beneficial interest in the property

One couple separated and in the divorce he signed a document stating he has no interest in the house. He only wants to make sure their children have a home. All good so far

.

presumably that documents that any beneficial interest he had is now with the spouse(and/or kids).
in some ways the spouse now turning out to be a legal owner probably helps with this as the Ex was the one everyone though was one of two owners.


For the deceased relative their beneficial interest follows the will/intestacy as explains in the previous post.

Keep_pedalling

TIC would be the normal thing to do under these circumstances so that if one of the 4 died they would be able to leave their share to their spouse rather that it transferring to the 3 remaining owners.

Not mentioning the house in a will is also normal, in fact it is usually a silly thing to do as it can cause failed legacies if it is no longer owned at the time of death.

No mis-selling here, this is 100% down to the owners.

SonOf

I wonder if this is an example of miss selling?

No.

My understanding is everything was done through the bank/mortgage, and know categorically they didn't know about the tenants in common.

The bank has nothing to do with the legals. The conveyancing solicitor does all that and they will set it up as required by the homebuyers.

Up until the early to mid 90s, most people used a local solicitor and would have a meeting with that solicitor to point out all the risks and issues. However, things changed and most people now dont want to do that and go for the cheaper option of just using a cheap conveyencing service and are providing documentation to read themselves. It goes without saying that many do not read it and just sign that they have.

I didn't know if lack of knowledge and understanding would be worthy, like with the old PPI's?

Putting aside that most mortgage PPI complaints failed, PPI is a regulated insurance product. Choosing how the house is owned is not a financial product.

There is no misselling here. It is also something that can be resolved by a solicitor as long as all parties are willing.