Property Charge and Repossesion Question

[mike_1985]

A few years ago my friend was buying a off plan property. After paying the initial 5% deposit he couldn't afford to pay the balance so he asked me to help him out or he could loose the deposit.
At first I didnt really wanted to know but as he "WAS" a very good friend I accepted .
He let me put a charge of 40k on the property and I was promissed to get my investment back withing 2 years witha little bit on top.
Things changed soon after he got engaged and we havent really spoked for a long time and I just heard that he will be repossessed .

A few questions

How will the mortagage company view my charge on the property ?
Would I get any money back from the mortgage company ?
I there any companies that would buy the charge off me ?

Mike

[Smirnoff]

First question, is there any equity in the property after the mortgage is paid off. If the answer is no then start to panic!

[rude-boy]

So, what we need are some more facts.

It sounds to me as though yours was a second charge on the property, were you represented? if so go straight to the person who acted for you at that time.

Even if your charge was registered it sounds lioke the best you can hope for is that you are second in priority after the lender who has repo'd. So if there is anything left after their loan, interest, fees, solicitors fees, agents fees and so on you will be next in line...

You need to get advice from a proper solicitor with all the facts to hand, not from us lot as whilst some of us know what we are talking about there is a world more info required.

[minimax]

second charges get paid in that order, and yes, very probably some company whom you could factor it to but I don't know which direction to point you in to find out names/numbers

I suppose tonker will be along soon to advise

[V8mate]

Any shortfall, sue your 'mate' immediately.

[rude-boy]

V8mate said:

Any shortfall, sue your 'mate' immediately.

Err, that might work, but just make sure that they are worth sueing in the first place. Nothing like letting someone spend thousands to get a judgement and then letting them find out there was no money in the pot to start off with...

[mike_1985]

The equity question

I think he had a 75% mortgage in 2005,so my guess would be that he has little or no equity left

Edited by mike_1985 on Tuesday 21st October 16:40

[V8mate]

rude-boy said:

V8mate said:

Any shortfall, sue your 'mate' immediately.

Err, that might work, but just make sure that they are worth sueing in the first place. Nothing like letting someone spend thousands to get a judgement and then letting them find out there was no money in the pot to start off with...

But the judgment will hang around like the proverbial smell. If funds aren't immediately forthcoming, OP can wait several years before choosing when to send bailiffs round.

[ThatPhilBrettGuy]

You'll be getting little or nothing then sadly. The mortgage company will always have the first charge.

[Smirnoff]

mike_1985 said:

The equity question

I think he had a 75% mortgage in 2005,so my guess would be that he has little or no equity left

Edited by mike_1985 on Tuesday 21st October 16:40

If you know the post code put it into www.hometrack.co.uk and see what has sold recently.

You will have no option than to sue.

Edited by Smirnoff on Tuesday 21st October 16:44

[mike_1985]

Do I cry now or later ?

[anonymous-user]

both?

[rude-boy]

mike_1985 said:

Do I cry now or later ?

Let'a put it this way, i doubt you'll see all of your £40k back again, if any, and even then only after paying a fair bit first.

Seriously though you need to make sure you see a solicitor asap, unless the other lender is already in touch with you (you should even then) as so long as the charge in your favour was registered at HMLR you will need to sign something so they can sell the property free from your charge.

If you did it on a nod, a wink and an agreement on the back of a fag packet you can almost certainly kiss all of it good bye.

Oh, just a thought, you did lend the guy this money, rather than put it in the pot and agree to be a joint owner didn't you...

[mike_1985]

rude-boy said:

mike_1985 said:

Do I cry now or later ?

Let'a put it this way, i doubt you'll see all of your £40k back again, if any, and even then only after paying a fair bit first.

Seriously though you need to make sure you see a solicitor asap, unless the other lender is already in touch with you (you should even then) as so long as the charge in your favour was registered at HMLR you will need to sign something so they can sell the property free from your charge.

If you did it on a nod, a wink and an agreement on the back of a fag packet you can almost certainly kiss all of it good bye.

Oh, just a thought, you did lend the guy this money, rather than put it in the pot and agree to be a joint owner didn't you...

I have a piece of paper from the land registry that shows I do have charge on the property. So basicly I need to get in touch with the mortgage company and maybe they can help making things clearer

[BRE77M]

This may be wrong ,but when the said property gets repossesed
The mortgage company will have difficulty selling it on as no other bank will lend on the property because of the outstanding charge .
there only option is to auction it off to a cash buyer with the charge still on which the new owners can either settle or pay off then they sell

you need to check to see if you can claim interest on your loan as this can increase the size of charge considerable
unfortunately i had to put a charge on one of my customers homes through non payment
He paid in the end when he wanted to move

good luck

[mike_1985]

Thanks for the information,I thought it was something along those lines .
I have been trying to find a solicitor that deals exclusively with these matters but its quite hard .
I have also been in touch with the law society to see if they recommend someone

I will keep this thread updated

[J-Skid]

Couple of things here:

1. I am suprised that the mortgage company allowed this - charges usually contain a negative pledge, which is a prohibition against the chargor (your mate) granting a further charge over the property without their permission. The consequences of failing to do this are usually that they default the mortgage and accelerate the loan (call in their security).

2. I take it the charge was registered correctly? If not you're in trouble.

3. Charges usually contains an express power of sale (over the ones occuring at law), so they have the power to sell and use the proceeds to repay the loan owed to them.

4. Absent any form of intercreditor / priority agreement, charges rank is date order of priority (first in time wins). Again, I am surprised that the bank allowed you to take a charge this without any form of agreement between you and the bank. See next point.

5. Without seeing the documents involved I can't go any further, but usually any subordinate charge holder (you) will be forced to release your security when required to do so by the priority chargeholder, otherwise you could effectively randsom their desire to sell the property and recover. The document will also contain things like marshalling rights etc.

At the end of the day the fact that you have a charge means very little if the property is underwater value wise and if there is not enough cash to pay off the mortgage. I fear you won't get anything out of this.

PM me if you want me to look at anything.

Edited by J-Skid on Wednesday 22 October 12:15

[mike_1985]

As far as I know the mortgage company didn't know about the charge. I guess they would know now as the charge shows on land registry ,I am trying to get in touch with the mortgage providers to clarify my possition

[Welshbeef]

mike_1985 said:

As far as I know the mortgage company didn't know about the charge. I guess they would know now as the charge shows on land registry ,I am trying to get in touch with the mortgage providers to clarify my possition

Ive seen this before on someones property - however no mortgage was involved. The Mr x put a charge on the property & the owner Mr Y had to respond within a month to agree/dispute the charge. He didnt dispute/respond so the charge stood. Selling the house was a nightmare - they couldnt sell frankly until the charge was settled and it spooked a few people who did searches on the house and then dropped out.

In your situation your giving him the deposit/extra deposit & the mortgage comp the mortgage, so you wouldnt have been first in the list of "charge" on the property.

I really feel for you, personally I never lend money to anyone (not talking about subbing £50 during a night out here thats different) not even family it potentially can ruin the relationship. Ive seen it happen and would never lend to a friend or family member.

[Welshbeef]

mike_1985 said:

As far as I know the mortgage company didn't know about the charge. I guess they would know now as the charge shows on land registry ,I am trying to get in touch with the mortgage providers to clarify my possition

Ive seen this before on someones property - however no mortgage was involved. The Mr x put a charge on the property & the owner Mr Y had to respond within a month to agree/dispute the charge. He didnt dispute/respond so the charge stood. Selling the house was a nightmare - they couldnt sell frankly until the charge was settled and it spooked a few people who did searches on the house and then dropped out.

In your situation your giving him the deposit/extra deposit & the mortgage comp the mortgage, so you wouldnt have been first in the list of "charge" on the property.

I really feel for you, personally I never lend money to anyone (not talking about subbing £50 during a night out here thats different) not even family it potentially can ruin the relationship. Ive seen it happen and would never lend to a friend or family member.