Seller has recently had the house signed over

Jdonn89

Looking for some advice/reassurance.

We have had a bid accepted on a house and have out final mortgage meeting with the bank soon to get everything tied up.

Solicitor called today advising they had an issue in the paperwork from the sellers end and that the property deeds had been transferred 2 months prior for no fee. From the older parents to a child. Seems the old dears went into supported accommodation and the estate was signed over to the child who decided to sell the house.

They mentioned that some mortgage lenders wouldn’t lend in these circumstances. It needs to be a minimum of 6 month between sales. He is chasing up the sellers side to clarify what actually went on.

Felt like a kick to the gut after finally getting accepted after ages of trying.

Just wondering as the house hasn’t actually been sold, only given to a family member would the bank be willing to disregard the 6 month rule on this occasion.

user1977

Might help if you told us which bank it is, given not all their policies are identical (though six months is a typical rule of thumb).

Jdonn89

user1977 said:

Might help if you told us which bank it is, given not all their policies are identical (though six months is a typical rule of thumb).

RBS is the bank.

180 agreed in principle, the mortgage we’re asking for is 120.

Thrugelmir

Sounds as if there's no LPA in place. An attempt to avoid care home fees. 

Jdonn89

Thrugelmir said:

Sounds as if there's no LPA in place. An attempt to avoid care home fees. 

Any idea whether that would affect the sale? Or have they just been caught out and the amount will be taken into account for the fees?

Beginning to worry either they, or the bank, will just pull the plug now. 

user1977

Banks have these rules because something which has changed hands very recently has a tendency to be an indicator of mortgage fraud or money-laundering, and it's easier for them just to apply a blanket policy rather than try to figure out the risk in every case. When were you expecting to complete? The six month minimum ought to run from completion date to completion date.

The Lenders' Handbook info for RBS doesn't give any hint about whether they have any standard exceptions to the rule:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/the-royal-bank-of-scotland-plc/#C9130

Jdonn89

Just found out the transfer was one under love favour and affection 

reps checking out whether things can still go ahead as it isn’t a new sale as such

user1977

Jdonn89 said:

Just found out the transfer was one under love favour and affection 

Not likely to make any difference. And the stated consideration should in any event be treated with some suspicion where it was a transaction between connected parties, as you never know what really happened behind the scenes.

saajan_12

There's 2 issues to this: 
1) 6 month rule - many banks don't like lending on a property with a transfer within 6 months, as this might indicate a problem with the property, money laundering, etc.
-> Would suggest speak to a broker to see if they know any lenders who might be more flexible or  make an exception. Alternatively, wait out the 6 months (it'll take a bit of time for conveyancing etc anyway)

2) Transfers under market value (here £0) in the last 5-6 years have a worry If the parents had any debts or need to pay for care, the creditors could look to the property as an asset and look to unwind a gift made in the last 5-6 years. 
-> Would look to do a credit search on the parents, and get indemnity insurance to the value of the property. 

Jdonn89

Just an update on this.

Lender has agreed the mortgage but the completion date is being held back until the 6 months has passed.

Agreed a move date with the seller for 1 week after the 6 month period.

Their solicitor has apologised and said it was an oversight on their part, they were of the understanding the property had been inherited which wasn’t the case.