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Selling 2/3rd share of house.

Suppose I had a house to sell.
Suppose I had potential buyers..a young couple I knew.

They like and want the house, but can't get a mortgage for the whole ammount.
If I sold them a 2/3rd share in the house with an option to buy the third share in the future at market value. Me keeping the 1/3rd share as an investment.
If they want to sell, the can do, at market value. They would have to repay my 1/3rd at market value.

with me so far ???

can anyone see any pitfalls with this sort of arrangement ??

only thing I can see is if they split and default on their mortgage payments.
Can the bank reposess a house with shared ownership ??
Would they get a mortgage on a house with split ownership ??
Would I be liable for their payments ?

If they are living in the house and paying all the bills, would I be expected to pay for maintenance bills ?
It not like paying rent and expecting the landlord to do the repairs. They will own most of the house and will cause most of the wear and tear living there.

Can anyone see any other problems arising ??

rob :D
If only everything in life was as reliable...AS ME !!
robowen 5/6/2005©

''Never take an idiot anywhere with you. You'll always find one when you get there.''

Replies

  • Ian_WIan_W Forumite
    3.8K Posts
    Part of the Furniture 1,000 Posts Photogenic
    Forumite
    robowen wrote: only thing I can see is if they split and default on their mortgage payments.
    Can the bank reposess a house with shared ownership ??
    Would they get a mortgage on a house with split ownership ??
    Would I be liable for their payments ?
    That's the big pitfall, I would have thought rob. The issue of maintenance and your rights to payment on sale etc could probably be dealt with by a covenant [or some such legal thingy] in the sale documents but finance might be the real stumbling block.

    These shared ownership arrangements are all the rage with builders and Housing Assn's to help FTB's onto the housing ladder but I guess these big players will have arrangements with lenders to cover the points you raise. I can't see any lender offering a mortgage unless they can repossess if the buyers default, so whether they would offer a mortgage on a private shared ownership deal is questionable. Maybe the big players have agreements in place to meet the lenders 2/3rds if share owners default then they can resell in the normal way rather than by forced sale - and still chase the defaulters themselves.

    Plenty of these schemes in Manchester according to the MEN - why not visit one as a "purchaser", see who does the finance and make some enquires with them. Nothing to lose by trying to find out how they do it.
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