Need advice - Charges on a property I am purchasing

MightyMarvel

Hi Everyone!

I am in desperate need of some advice and would be very grateful for any thoughts on this.

My wife and I are in the process of purchasing our onward property.  All but one issue has been resolved and the rest of the chain is ready to move but the property we are purchasing has 6 charges on it - 1 mortgage, 1 debt and 4 CCJ's.

The vendors solicitor has so far confirmed that they have agreed settlement figures for 3 of the 6 charges.  Of these 3, none have committed to removing the charge after the debt has been settled.  As such, their solicitor will not give the commitment to settle these charges on completion.  My solicitor has lent towards not proceeding without this commitment, which of course seems entirely sensible.

Is this normal?  What I am struggling to understand here is, if a lender is to be repaid in full on completion, why would they not give a commitment to remove the charge afterwards?  It is assumed that one of these 3 is the mortgage company (not your run of the mill bank/building society).

Of course we would prefer that their solicitor gives the commitment to remove the charges, but where would we stand if we proceeded and the lender(s) failed to remove the charge.  Does that mean that the debt then becomes ours?  Would we have to fight the case?  I would find it hard to believe that we could be held liable for someone else's debt and would assume there would be measures in place, whether it be legislation or legal precedent etc., to protect the innocent party.  And surely if their solicitor fails to repay the charges, they have a case to answer, regardless of whether they gave a commitment or not.

This is an area where I am particularly unsure, so some advice to help make an informed decision would be great.

The second issue is the remaining 3 charges.  Their solicitor alleges that:

Debt 4 was sold and they have had difficulty tracking down who now has the debt.
Debt 5 is with a third solicitor (I do not know how and why) but have only confirmed that there are "issues".
Debt 6 is known but the lender will not reply to any correspondence.

Unfortunately, we can only go by what my solicitor tells us.  What happens if a lender is ignoring correspondence?  I would assume it would have to go back to the court where the CCJ was issued to instruct them resolve the debt?  If this is correct, I assume it would take many months to resolve.

Any information on this would be greatly appreciated.

Many thanks!

Olinda99

two things bring to mind here. the first is if you are getting a mortgage then they will require a first charge on the property anyway so all the other charges will have to be discharged. 

secondly yes if a charge is on property then the property can be forced to be sold to repay the charge - whoever owns it. That is the whole point of a charge

your solicitor will need commitment that all six charges will be discharged at completion. As you say if the original lender cannot be found you will need to go the court route.

Mark_d

Charges on the property give parties the right to some or all of the value of the property, if money owed to them is not paid as required.

If/when the property is sold to you, the seller might be able to repay the mortgage but not necessarily everything that is secured against the property.  If the seller then defaults on a secured loan, the loan company can sell your property and recover the amount owed to them, if they have a charge on the property.

MightyMarvel

Thanks both for Mark_d said:

Charges on the property give parties the right to some or all of the value of the property, if money owed to them is not paid as required.

If/when the property is sold to you, the seller might be able to repay the mortgage but not necessarily everything that is secured against the property.  If the seller then defaults on a secured loan, the loan company can sell your property and recover the amount owed to them, if they have a charge on the property.

Mark_d said:

Charges on the property give parties the right to some or all of the value of the property, if money owed to them is not paid as required.

If/when the property is sold to you, the seller might be able to repay the mortgage but not necessarily everything that is secured against the property.  If the seller then defaults on a secured loan, the loan company can sell your property and recover the amount owed to them, if they have a charge on the property.

Thanks both for your responses. So basically, the lender must give the commitment to their solicitor who in turn gives it to us. 

But why would a lender not commit to removing the charge if they are to be settled on completion?

I doubt this is unique and if lenders do not give commitments to settling charges, would it not cause havoc in the housing market?

silvercar

MightyMarvel said:

Thanks both for Mark_d said:

Charges on the property give parties the right to some or all of the value of the property, if money owed to them is not paid as required.

If/when the property is sold to you, the seller might be able to repay the mortgage but not necessarily everything that is secured against the property.  If the seller then defaults on a secured loan, the loan company can sell your property and recover the amount owed to them, if they have a charge on the property.

Mark_d said:

Charges on the property give parties the right to some or all of the value of the property, if money owed to them is not paid as required.

If/when the property is sold to you, the seller might be able to repay the mortgage but not necessarily everything that is secured against the property.  If the seller then defaults on a secured loan, the loan company can sell your property and recover the amount owed to them, if they have a charge on the property.

Thanks both for your responses. So basically, the lender must give the commitment to their solicitor who in turn gives it to us. 

But why would a lender not commit to removing the charge if they are to be settled on completion?

I doubt this is unique and if lenders do not give commitments to settling charges, would it not cause havoc in the housing market?

Sometimes because the borrower has other borrowing from the same lender and the paperwork for that gives the lender the right to secure the loan against other security they have. eg If I have a mortgage on my house that would be secured via a charge on the title deeds. I could then take an unsecured loan from the same lender and the paperwork may say that the lender reserves the right to use any security they have in my name as security for this loan too. In the normal course of events, they may not be bothered that I have an unsecured loan, but if I have already defaulted on payments for the unsecured loan they could decide not to release the charge for the mortgage until this unsecured loan is also cleared. It also happens with business borrowing facilities. The lender may be happy with a business loan or overdraft with a personal guarantee as they also have a mortgage secured on a property for the same person.

Hoenir

If you are purchasing with a mortgage then your lender has a vested interest also. Unlikely to release the funds until  there's a satisfactory agreement reached. 

silvercar

To be clear, this a problem for the seller. No one is going to buy their property with outstanding charges on it of unknown amounts.

All you can do is wait or walk away.

YoungBlueEyes

Olinda99 said:

two things bring to mind here. the first is if you are getting a mortgage then they will require a first charge on the property anyway so all the other charges will have to be discharged. 

secondly yes if a charge is on property then the property can be forced to be sold to repay the charge - whoever owns it. That is the whole point of a charge

your solicitor will need commitment that all six charges will be discharged at completion. As you say if the original lender cannot be found you will need to go the court route.

My bolding. Is this actually the OP's problem to resolve?

As silvercar says, you either wait for them to sort it out or find somewhere else.

MightyMarvel

I am grateful for all the responses. Yes, it is a problem for the seller, but the lack of information and a seeming unwillingness from our solicitor to press the issue is causing some pain.

Ultimately, it seems there is little we can do unless their lenders agree to removed the charges upon completion. So the options seem clear (unless anyone else has something to add): 

Hang tight and hope or walk away.

housebuyer143

Unfortunately you can't buy a property with charges, because you will not be held liable for someone else's debt but you will be unable to register the property in your name until the changes are removed. No mortgage lender will agree to this. 

If they can't track down 3 of the creditor's and the solicitor won't give yours assurances that the changes will be paid and removed after completion then you are in a dead lock because you can't move forward without this.