Jump to content
House Price Crash Forum
Sign in to follow this  
Akrasia

Giving Away Houses Before They're Repossessed

Recommended Posts

A BTL landlord in my area is trying to give away two properties for free before they get repossessed. Presumably he's planning on declaring himself bankrupt, so doesn't care that this way his debt to the mortgage company will be greater than if the properties were sold to cover as much of it as possible. Does anyone know how this might play out legally?

Share this post


Link to post
Share on other sites
A BTL landlord in my area is trying to give away two properties for free before they get repossessed. Presumably he's planning on declaring himself bankrupt, so doesn't care that this way his debt to the mortgage company will be greater than if the properties were sold to cover as much of it as possible. Does anyone know how this might play out legally?

He cannot "give away" properties which are subject to either max 100% mortgage or negative equity - in which case they are the property of the bank with the primary charge (or loan) on the property.

This is a nonsense story. Unless you can shed more light on how the mechanics will work?

Share this post


Link to post
Share on other sites

IMO this is a scam, to get some poor sucker like you to take over the house (which is in negative equity).

All he'll do, is send you papers to put your name on the debt, rather than his. What he's actually giving you, is his debt!

He's planning for you to go bankrupt instead of him! And like a mug, you fell for it. No such thing as a free lunch, remember?

Share this post


Link to post
Share on other sites
This is a nonsense story. Unless you can shed more light on how the mechanics will work?

To be honest, I've no idea about the details. I just know that he's asking for someone to "sign them over to" for "no money at all" because "its [sic] either lose them to repossesion or give them to an investor who's willing to take them on".

Share this post


Link to post
Share on other sites
IMO this is a scam, to get some poor sucker like you to take over the house (which is in negative equity).

It may well be, in which case I'd be interested to know how it works and what the legal situation is.

He's planning for you to go bankrupt instead of him! And like a mug, you fell for it. No such thing as a free lunch, remember?

Actually, I don't have the slightest intention of pursuing this, I'm just curious about what he's up to. Thanks for your concern though.

Share this post


Link to post
Share on other sites

I'm not a lawyer, but IMO it's simple. The land registry is a piece of paper with his name and the mortgage. All he's doing is putting your name on the piece of paper instead of his. This means you own the negative equity property instead of him.

Then the mortgage company forecloses on the house, and chases you both for the difference. Him, because it's (probably) still his name on the mortgage and you because you're participating in a fraud.

Legally, the judge would have no sympathy. If you were really lucky, the Land registry might refuse to register it unless the mortgage company accepted it (which of course they won't unless the mortgage is in your name).

Share this post


Link to post
Share on other sites
A BTL landlord in my area is trying to give away two properties for free before they get repossessed. Presumably he's planning on declaring himself bankrupt, so doesn't care that this way his debt to the mortgage company will be greater than if the properties were sold to cover as much of it as possible. Does anyone know how this might play out legally?

The bank won't release the charge unless the mortgage is paid off, so it won't be possible to do this.

Share this post


Link to post
Share on other sites

I've just thought of the only possible way in which this might work - if the properties are owned by a company, and are the main assets of the company, then the Landlord (if he is the correct owner of the company or 100% of its shares) could flog it for, say, 1p to someone else.

But whoever bought the company would also be taking on all its debt and liabilities so would in fact either be a certifiable looney, or a thicko mug. And there are a lot of both around.

Share this post


Link to post
Share on other sites

Let's suppose that he is trying to get someone else to take on his mortgage commitments without realising it. Given the personal checks that are involved in taking out a mortgage, I'd be astonished if they could be transferred from one individual to another easily enough that it wasn't obvious what was happening. Does anyone know if it's possible to transfer a mortgage, and if so what's involved?

Share this post


Link to post
Share on other sites

Do Land registry transfers require the consent of the mortgage company? I don't believe so, that's why you have to get the undertaking to pay off the mortgage in the requisitions...there's nothing to stop you taking a property on subject to the pre existing mortgage IMO (although of course only a fool would do so, and the mortgage company would still have a prior claim to the property afterwards). It may not be registrable though without the consent?

Edited by 24gray24

Share this post


Link to post
Share on other sites
Let's suppose that he is trying to get someone else to take on his mortgage commitments without realising it. Given the personal checks that are involved in taking out a mortgage, I'd be astonished if they could be transferred from one individual to another easily enough that it wasn't obvious what was happening. Does anyone know if it's possible to transfer a mortgage, and if so what's involved?

Not that I am aware of and certainly not without the permission of the mortgagor. Can you imagine this scenario: you lend a mate 500 quid with a written IOU and repayment terms agreed on the paper. After a few weeks he comes to you and says he has given away the loan to someone else and he is no longer liable to pay for it, but the new owner of the loan will pay you. Now if you try to take that inconceivable scenario to the total debt NE property context and you will see how silly the idea of being able to transfer a mortgage is.

Share this post


Link to post
Share on other sites
Not that I am aware of and certainly not without the permission of the mortgagor. Can you imagine this scenario: you lend a mate 500 quid with a written IOU and repayment terms agreed on the paper. After a few weeks he comes to you and says he has given away the loan to someone else and he is no longer liable to pay for it, but the new owner of the loan will pay you. Now if you try to take that inconceivable scenario to the total debt NE property context and you will see how silly the idea of being able to transfer a mortgage is.

He's not giving the loan, he's giving the property. It's like a car on finance: he's sold the car, but he's still liable for the loan even though he no longer has the car. (The new owner can be repossessed if the first guy doesn't pay).

Not quite sure about the property scenario. If you were the chump, you'd really be hoping the Land registry query it. But is it possible to transfer subject to the mortgage (with the first owner still liable for it)? Not sure. Think it may be, especially as it's for no consideration, since it actually doesn't affect the bank's rights at all: they can still foreclose if mortgage not paid.

2 real questions: can it be registered at all? And does it actually stop the first guy being liable for the negative equity? (I think possibly, and no)...so I agree the company share sale scenario looks more likely.

Share this post


Link to post
Share on other sites
He's not giving the loan, he's giving the property. It's like a car on finance: he's sold the car, but he's still liable for the loan even though he no longer has the car. (The new owner can be repossessed if the first guy doesn't pay).

Not quite sure about the property scenario. If you were the chump, you'd really be hoping the Land registry query it. But is it possible to transfer subject to the mortgage (with the first owner still liable for it)? Not sure. Think it may be, especially as it's for no consideration, since it actually doesn't affect the bank's rights at all: they can still foreclose if mortgage not paid.

2 real questions: can it be registered at all? And does it actually stop the first guy being liable for the negative equity? (I think possibly, and no)...so I agree the company share sale scenario looks more likely.

I am afraid the registration processes for the owners of cars and property are very different processes and the land registry will not transfer a deed of title to a property into a new name if there is an unwitting lender with a charge on it. Whereas the DVLA will transfer the log book of a car into a new owner's name without reference to any HPI checks to see if any HP loan is attached to the vehicle. Property registration is a much more formal business. Not fraud-proof mind.

That's the end of that then.

Share this post


Link to post
Share on other sites
Do Land registry transfers require the consent of the mortgage company? I don't believe so, that's why you have to get the undertaking to pay off the mortgage in the requisitions...there's nothing to stop you taking a property on subject to the pre existing mortgage IMO (although of course only a fool would do so, and the mortgage company would still have a prior claim to the property afterwards). It may not be registrable though without the consent?

Only if the charge contains a restriction which states that no disposition of the land is to take place without the consent of the chargee.

EDIT: Transfers of equity do take place quite often. Mind you the fact that the borrower has signed the mortgage can't be signed away so easily.

Edited by Driver

Share this post


Link to post
Share on other sites
The bank won't release the charge unless the mortgage is paid off, so it won't be possible to do this.

Excactly - without exception.

Where there is any form of charge over a property nothing can be done to transfer ownership until the persons/entities with the charge have been satisfied.

We have seen a few occasions where sellers (some btl) have tried to sell at a loss, and the bank have prevented the sale as they will not recover the mortgage debt. In one case the subsequent repossession meant it eventually sold for over 15% less that it would have done, excluding costs etc.

Share this post


Link to post
Share on other sites
Excactly - without exception.

Where there is any form of charge over a property nothing can be done to transfer ownership until the persons/entities with the charge have been satisfied.

We have seen a few occasions where sellers (some btl) have tried to sell at a loss, and the bank have prevented the sale as they will not recover the mortgage debt. In one case the subsequent repossession meant it eventually sold for over 15% less that it would have done, excluding costs etc.

This is not entirely true. The proprietors of the land can sell to others provided there is no restriction in the charge (mortgage document) that stops them. Mind you even if they did sell, that doesn't mean they are no free to go wander so it is a rather moot point.

Share this post


Link to post
Share on other sites

If he can find someone that the mortgage company thinks is more likely to be able to service the debt than him, he may well find a victim.

I once met someone who was offered a pub in settlement of a debt, and who had duly accepted a transfer of a nasty PubCo tenancy agreement's liabilities to them.

Share this post


Link to post
Share on other sites
Dont the banks hold the deeds anyway, so they're still in legal possession of the house?

They may hold the deeds but they do not own the land.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   296 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.