One for the legal eagles - forcing the sale of a jointly owned house

[MNW67]

I was being polite, since this is a real person’s problem. The bigger issue is the liabilities are greater than the asset and we assume there is no tenant bringing an income.

The other guy needs to bite the bullet. Explain to him that in two years time the house will be repossessed and he will probably end up with a much bigger loss. Dropping the price now would be in his best interests.

 

[motorbiking]

Go and see a solicitor. The first half-hour is normally free, so ask first. You will at least get an idea of the options available to you based on what you tell them. Make a list of what questions you need to ask and write the answers down in case you forget.

This is good advice. But i can short cut the answer. We can write a letter before action ££ setting out your claim and if necessary take instruction to obtain the order. ££££

 

[MNW67]

A matter of mine bought a house in 1985 and he was advised to have such an agreement drawn up and did.

That’s 40 years ago

What did it say about this type of situation.

 

[motorbiking]

The other guy needs to bite the bullet. Explain to him that in two years time the house will be repossessed and he will probably end up with a much bigger loss. Just drop the price now.

Not that easy both are facing a hit and one party may feel that it needs to run a little longer before they take their losses.

One option is to find a mutual friend to meditate and set out a plan agreeing how much longer they market, when they reduce the price etc.

It’s going to be a lot cheaper for the two to come to an agreement

This can be documented and signed. And it will help in the TOLATA action.

 

[motorbiking]

I don't want to run up large legal bills but my credit rating is important to my present business, so it needs protection from another's potential default.
I am reluctant at this stage to approach the mortgage company for fear of them calling in the debt early; to be clear, the payments have always been on time and are up to date.

Always handy if the OP can return to his post and share where his head is at. But to summarise:

1) advise the other that you are considering a TOLATA action, to order sale.
2) suggest that despite the breakdown of our friendship we need to agree a plan to get out of this mess.
3) If he is open to discussion, try to be open to compromise, but draft up a plan that says how long it will be marketed, when we consider lowering the price and if there is anything we can do to improve the sale (painting etc)
4) once agreed - sign and date the plan.
5) If he wont engage in a plan set out a reasonable plan and send it to him with a letter before action which is CRP compliant.

This presentation might be helpful

https://www.lawworks.org.uk/sites/default/files/files/ProceduralTopTipsPresentationLawWorksTraining2019.pdf

 

[MeldrewsMate]

Here are the questions:
1. I believe an application can be made to the court to force a sale at market value - what is the name of that process?
2. If unsuccessful in forcing a sale, will I be allowed to pay just my half of the remaining mortgage when the loan is called-in?
3. How can I protect my creditworthiness if the other mortgagee defaults on his half?

Thanks for your concise and relevant answers. We are in this mess because we made a poor investment decision. Since purchase the house has been improved by decoration and bathroom/kitchen renewal, however it is in an area where the 'boom' of 2006 has never been repeated and it is now only worth about 90% of the original purchase price. To re-mortgage today we (or one of us) would need about a 105% mortgage, or put down around a £15k deposit.
Currently the house is let short term and is just about paying for itself.

My understanding of your answers to my questions are as follows.
A1. Yes, a court order to force a sale (an Order for Sale) at market value is one route, but may be expensive to obtain. Is the TOLATA regs the rules that now relate to this type of application?
A2. No, we are jointly and severally responsible, so even if I cough up 50% of the mortgage they could (and would be more likely to!) pursue me for the rest if my ex-mate defaults.
A3. I can't protect myself if he defaults as we are jointly and severally liable, ergo we both get a poor credit rating.

Thanks again for your replies, next stop a read of the TOLATA regs (thanks to @motorbiking for the link)

 

[MeldrewsMate]

A cursory read of TOLATA seems to suggest it only applies to the forced sale of land and property held in trust....more relevant to Angela Rayner than to me.

 

[motorbiking]

Thanks for your concise and relevant answers. We are in this mess because we made a poor investment decision. Since purchase the house has been improved by decoration and bathroom/kitchen renewal, however it is in an area where the 'boom' of 2006 has never been repeated and it is now only worth about 90% of the original purchase price. To re-mortgage today we (or one of us) would need about a 105% mortgage, or put down around a £15k deposit.
Currently the house is let short term and is just about paying for itself.

My understanding of your answers to my questions are as follows.
A1. Yes, a court order to force a sale (an Order for Sale) at market value is one route, but may be expensive to obtain. Is the TOLATA regs the rules that now relate to this type of application?
A2. No, we are jointly and severally responsible, so even if I cough up 50% of the mortgage they could (and would be more likely to!) pursue me for the rest if my ex-mate defaults.
A3. I can't protect myself if he defaults as we are jointly and severally liable, ergo we both get a poor credit rating.

Thanks again for your replies, next stop a read of the TOLATA regs (thanks to @motorbiking for the link)

Yes the best approach that costs you the least is to find some way to agree an action plan and for you both to sign it. If that is breached then it will be easier to get an order under sec 14 TOLATA. Given the situation a judge may be willing to order a plan that leads ultimately to sale within a timeframe, rather than a straight forward right for one party to sell.

A cursory read of TOLATA seems to suggest it only applies to the forced sale of land and property held in trust....more relevant to Angela Rayner than to me.

No this is the legislation that grants co-owners the power to sell if they cannot agree. It is normally applied to unmarried cohabitants. Read both section 15 too.

 

[MNW67]

A cursory read of TOLATA seems to suggest it only applies to the forced sale of land and property held in trust....more relevant to Angela Rayner than to me.

I think that is just down to terminology.

All jointly owned property in E&W is technically held in trust. It is one of those confusing things about Land Law!

 

[motorbiking]

I think that is just down to terminology.

All jointly owned property in E&W is technically held in trust. It is one of those confusing things about Land Law!

correct - This relationship is called a co-ownership trust.

 

[MNW67]

Thanks for your concise and relevant answers. We are in this mess because we made a poor investment decision. Since purchase the house has been improved by decoration and bathroom/kitchen renewal, however it is in an area where the 'boom' of 2006 has never been repeated and it is now only worth about 90% of the original purchase price. To re-mortgage today we (or one of us) would need about a 105% mortgage, or put down around a £15k deposit.
Currently the house is let short term and is just about paying for itself.

My understanding of your answers to my questions are as follows.
A1. Yes, a court order to force a sale (an Order for Sale) at market value is one route, but may be expensive to obtain. Is the TOLATA regs the rules that now relate to this type of application?
A2. No, we are jointly and severally responsible, so even if I cough up 50% of the mortgage they could (and would be more likely to!) pursue me for the rest if my ex-mate defaults.
A3. I can't protect myself if he defaults as we are jointly and severally liable, ergo we both get a poor credit rating.

Thanks again for your replies, next stop a read of the TOLATA regs (thanks to @motorbiking for the link)

One thing @motorbiking and @Murdochcat asked was whether you made an agreement or declaration between you when you bought the property to cover situations like this. Such an agreement might cover, for instance, one party's right to sue the other party if the other party didn't pay their share. Also, as you seem to be tenants in common, it is likely you would have signed a declaration that you have equal shares. That declaration might also cover what happens when one party wants to sell and the other doesn't.

 

[motorbiking]

I can’t stress enough how important it is to try to get an agreed plan rather than seek an order for sale. You may need to issue a letter before action to force that meeting however.

It’s probably around £3k minimum to get the order.

Another option is to look at the mortgage holders rights of step in. These will be in the terms of the mortgage.

 

[MNW67]

correct - This relationship is called a co-ownership trust.

One of the things I always found interesting about the pre-1996 situation was that all jointly held property was held on "trust for sale" and the trustees were technically under a duty to sell it. But there was an implied power for the sale to be postponed indefinitely as long as both of them agreed. It always struck me as a strange way to organise property ownership!

 

[Deleted member 317777]

Several years ago I bought a house along with a friend, and we rented it out.
My understanding is that we are mortgaged on the basis of mortgagees in common.
We made about enough over the years to pay for the refurbs after the tenant(s) left, and enough to pay down the mortgage so that it is just about 10 grand higher than the market value.

Fast forward to the present day and we have fallen out, neither wants to buy out the other, and the interest only mortgage term ends in 2 years.
We are facing the reality of finding £10-15k more than the house is worth when the loan is called-in.
The house was bought for £105,000 in 2006, now worth about £85,000 with a £95,000 interest only mortgage.

The house has been on the market for nearly 18 months, with very little interest at £95,000 because my (ex) friend will not drop the price.

Here are the questions:
1. I believe an application can be made to the court to force a sale at market value - what is the name of that process?
2. If unsuccessful in forcing a sale, will I be allowed to pay just my half of the remaining mortgage when the loan is called-in?
3. How can I protect my creditworthiness if the other mortgagee defaults on his half?

I don't want to run up large legal bills but my credit rating is important to my present business, so it needs protection from another's potential default.
I am reluctant at this stage to approach the mortgage company for fear of them calling in the debt early; to be clear, the payments have always been on time and are up to date.

Rent it to Serco for 5 years ?

You won’t have to maintain etc. see how you feel in 5 years

 

[blup]

Rent it to Serco for 5 years ?

You won’t have to maintain etc. see how you feel in 5 years

Or let the garden shed to house re forms entire ready for government team (Dorris)