Equity fraud

jackierotty

We have recently found out my partners parents had sold part of their house equity £20,000, but I may add it was the dad not the mum and she refused and didn’t sign for and now she has died. The  family wish to get this locked into as we have been informed that once dad has died the house is not the families anymore and 2 sons and a grandson still lives at the home. The 2 sons wish to buy the house back of dad but need advice on this false sale of equity before anything serious happens and 3 people will be homeless 

penners324

The equity loan will need repaying. Best to get the details of this.
Can you prove it was fraud? By whom? Getting your father arrested for it?

KatrinaWaves

How much is the house worth? They released 20k and now the whole house belongs to the equity release company?

Whos is ‘informing’ you of these things? 

If the home is not owned by the parents then the sons and grandson will just have to find somewhere else to live. If there are disabilities or the grandson is a child, then the council may help the son with the child or the disabilities, but if they are just two adults with children they’ll just have to find somewhere to live. 

Bossypants

What makes you think it's fraud? Releasing equity in a home is a reasonably common thing for older people to do. It has its pros and cons, but on the face of it it's perfectly legal. If your concern is that Mum didn't sign off, that's more likely to fall back on Dad than the company, unless you can prove negligence on their part somehow.

Usually when you release equity, there is a charge put against the property, like a mortgage which is to be paid off on the sale of the property. If the two sons want to buy the house from the estate following Dad's death, this doesn't really make much difference to them, they'll just pay the estate the market value as normal, and then the estate will use part of that to pay the equity release company what they are owed.

greatcrested

Whether mum agreed or not is pretty irrelevant now that she is deceased.

And if it was fraud (unlikely), do you really want to send dad to prison? Well, maybe you do - I don't know your family dynamics...

As for the future, you need to clarify the equity release scheme:

* how much was released? £20K?

* what is the (current) value of the house?

* is there any other debt/mortgage on the house? If yes, how much?

* what are the terms of the equity release?

* eg can it be repaid prior to death/sale? If so, on what terms?

* on death/sale, what happens? What/how much must be repaid to the equity release company?

It seems unlikely that in return for £20K "the house is not the families anymore" but I guess it also depends on the house value.

The  family wish to get this locked into

No idea what you mean. Lock into the loan? Surely you want to be released from the loan?

Of course, ultimately this is none of your business; dad took out the loan (for that round-the-world trip with mum before she died?) and it was his money - his choice.

If the sons wish to buy the house, dad will need to get the Charge removed from the Title. How to do this will depend on the terms of the equity release agreement - which I can't see from here.

eidand

they probably mean looked into

AdrianC

jackierotty said:

We have recently found out my partners parents had sold part of their house equity £20,000

What's more likely is that £20k was borrowed with the house as security, with no repayments due until after death or sale. A larger amount would then be payable, but you would need to read the paperwork to find out how much.

but I may add it was the dad not the mum and she refused and didn’t sign for and now she has died.

So he did the paperwork, she didn't sign, and now she's died. OK, and...?

How is/was the house owned? Joint tenants, tenants-in-common, or just in his name?

The  family wish to get this locked into as we have been informed that once dad has died the house is not the families anymore and 2 sons and a grandson still lives at the home. The 2 sons wish to buy the house back of dad but need advice on this false sale of equity before anything serious happens and 3 people will be homeless

The easiest way to resolve it is to repay the £20k plus whatever interest was signed up to.

I presume that "dad" has already spent that... Why would these two grown adults and one of their children be "homeless"? Is there something you haven't mentioned which means they are incapable of providing their own accommodation? But I presume it's not serious enough that they are incapable of living independently?

Why is the sale "false"? Your father in law borrowed £20k under an equity release from the house. We do not know whether there was any irregularity in the paperwork, but it's probably academic now. You may not think it was wise, but that's a totally separate issue and - frankly - none of your business. He is a grown adult and was perfectly capable of making his own decisions at the time, I presume?

[Deleted User]

My dad did exactly the same.  He retired early, had an interest only mortgage, took out equity release scheme (one of the earlier ones so little protection or 'fairness').  The amount owing wasn't enormous, it could have been managed but he told no one and went ahead. 

He lived for 25 years.  A year before he died the family found out about the equity release because it actually meant he couldn't sell the property and move to something more suitable when he became infirm.  Nothing to be done.., basically the equity release firm owned the property.  I suppose the good side is it gave him 25 years in the property.  The bad side is, if he'd told someone they would have given him the money (someone said this).  The really bad side is some of this money was used for a holiday to various places.  I guess that is what he wanted.  He's from another generation where the man rules, sadly.  His wife wasn't given much choice.  It didn't help their marriage.  Its all rather sad and ended rather badly.  But hindsight is 20:20

With regards to the OP.., there doesn't seem to be any fraud.  Read the paperwork as you have been advised - do you even know how much is owing?  Forget the fraud aspect.  Concentrate on what realistic options there are in front of you.  But please, if he is still alive, don't let this ruin your FIL's last years.  I'm sure his children can live elsewhere.  It was his money, his house, his decision.  They shouldn't really be expecting hand outs. When my father died I cleaned the flat and walked away with a TV.  I'd far far rather have had an extra few happier months.  It caused a lot of problems within his wife's family who thought he'd been a fool.  He had of course, but being angry sorted nothing and ruined his last few months.

Thrugelmir

deannatrois said:

The really bad side is some of this money was used for a holiday to various places.  I guess that is what he wanted.  

His money his choice. Having memories is better than dying leaving a pile of bricks. 

steampowered

The most important step with these things is to get accurate information about what actually happened. Speculating can do more harm than good.

See if you can get a copy of the documentation. Start by doing a search on the land registry and getting a copy of the register. Then see if you can get a copy of the equity release documentation which should explain the situation.

I hate to ask, but how can you be so sure that mum didn't sign off on this? Is it possible she signed the papers, but then forgot about it or didn't understand what she was doing? That's why it's so important to try and get a copy of the documentation.

[Deleted User]

Thrugelmir, I agree, I'd never have agreed with him when he did it but even if I'd have known (he didn't tell anyone anyway) it was none of my business.  Except for trying to make his last few months better at the end.  It was a bit frustrating cause of course one of the first things I asked about was selling his flat to buy something more suitable to his needs (he had had Parkinsons for years and by this time was severely affected, the flat was on the first floor with steep steps to access it and not at all suitable for someone with mobility problems).  That was when he told me.  At the time he did it, there wasn't the bad press about equity release schemes there is now.  And it was his house. Don't ask, but it really ended very badly.  Lack of options was a real stumbling box.  I say this in case anyone knows anyone thinking of equity release.  Situations that make it seem a sensible decision can change a few years later.

But also reinforce to the OP, its unlikely to be a fraudulent transaction legally.  Don't make your FIL's life miserable.  Your family who need somewhere to live have time to find somewhere one assumes.  Its not their house.  I did my best but I couldn't get his wife's family to show any consideration for his situation after she died and he needed more care, they were quite nasty to him (so he had an awful condition to deal with and their attitude when he was most vulnerable).  I might have agreed it wasn't the best decision but it was his right.