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mothers property
2 Answers
My mother and father divorced 7 years ago. It was decided then that my mother would have a 70% share in the house and my father a 30% share. It was also decided that my mother would remain living in the house and my father would move out however continue to make the mortgage repayments. The main reason behind this was because my mother is disabled with multiple scelorsis and cannot work. Within the last year my father has built up large amount of debts totalling approximately �40,000. The house is currently worth �135,000. My father can no longer make the mortgage repyaments. The amount left to pay on the property is �12,000. At this time my mother is having to pay the mortgage out of her incapacity benefits. My father is about to decalre himself bankcrupt. Unfortunetly my father took out two loans one secured on the house for �20,000 and the other unsecured for �20,000. We have established my father fraudulently signed by mothers name in order to get this loan secured on the house. He has since been cautioned by the Police after admitting this. We contacted a solicitor and they advised my mother if my father cannot pay the loans that are secured on the house they may well repossess it. Can you please advise where we stand in relation to this. Can the house be repossed and what about if I took on the mortgage can it still be repossed if I transfer the house into my name. Also what if we pay the mortgage off now and put the house up for sale, can the creditors still take some money? Cheers
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2 part post:
1. If he goes bankrupt, all his assets (including his share in the house) are at risk. I assume the 70:30 split has been formalised in the title deeds. If it has not, the Official Receiver (OR) may try to claim more than 30% & this would have to be fought. He may even try to claim more if the split has been formalised, based on who has contributed to the costs - deposit, mortgage payments etc.
2. It does not matter whether a debt is secured on the house for this purpose - the assets (which include his share in the house) can be realised to pay off the creditors, whether the debts are secured or not.
3. If he has obtained credit by fraud (which it appears he did for the secured loan) his liability will not be wiped out by his bankruptcy. Did he fraudulently get this loan in joint names - i.e. did he forge her signature on the loan agreement as well as on documents to secure it? If so, you need to make sure the lender is aware of the fraud as otherwise they could chase your mother for this debt.
4. Assuming he is on the title deeds you cannot transfer the house into your name without his consent. If he does consent, the OR will look on it as a transaction at an undervalue and proceed against you to undo it.
5. If you sell the house (again, he has to agree) then the OR will want to know what happened to his share of the proceeds. If you give him 30% of the equity (i.e. sale price less mortgage and selling costs) then he will have to account to the OR for what he does with it. Your mother's share should then hopefully be safe, unless the OR succeeds in querying the 70:30 split.
1. If he goes bankrupt, all his assets (including his share in the house) are at risk. I assume the 70:30 split has been formalised in the title deeds. If it has not, the Official Receiver (OR) may try to claim more than 30% & this would have to be fought. He may even try to claim more if the split has been formalised, based on who has contributed to the costs - deposit, mortgage payments etc.
2. It does not matter whether a debt is secured on the house for this purpose - the assets (which include his share in the house) can be realised to pay off the creditors, whether the debts are secured or not.
3. If he has obtained credit by fraud (which it appears he did for the secured loan) his liability will not be wiped out by his bankruptcy. Did he fraudulently get this loan in joint names - i.e. did he forge her signature on the loan agreement as well as on documents to secure it? If so, you need to make sure the lender is aware of the fraud as otherwise they could chase your mother for this debt.
4. Assuming he is on the title deeds you cannot transfer the house into your name without his consent. If he does consent, the OR will look on it as a transaction at an undervalue and proceed against you to undo it.
5. If you sell the house (again, he has to agree) then the OR will want to know what happened to his share of the proceeds. If you give him 30% of the equity (i.e. sale price less mortgage and selling costs) then he will have to account to the OR for what he does with it. Your mother's share should then hopefully be safe, unless the OR succeeds in querying the 70:30 split.
second part:
6. OR does have the power to ask the Court to order a sale, even if the bankrupt is only a part owner. But normally they start by trying to get relatives or other part owners to buy out the bankrupt's interest in the house. So if you do nothing now, after he is bankrupt you can expect the OR to do this. He will offer it to your mother or you at a valuation (based on the equity - i.e. value less mortgage & costs). You may need to negotiate on what that valuation is (depending on whether it appears to be unreasonably high). If you can then raise the money to buy out his interest your mother can stay in the house.
7. Look at the Insolvency Service website. Among their booklets is one giving general advice on what happens to houses in bankruptcy.
6. OR does have the power to ask the Court to order a sale, even if the bankrupt is only a part owner. But normally they start by trying to get relatives or other part owners to buy out the bankrupt's interest in the house. So if you do nothing now, after he is bankrupt you can expect the OR to do this. He will offer it to your mother or you at a valuation (based on the equity - i.e. value less mortgage & costs). You may need to negotiate on what that valuation is (depending on whether it appears to be unreasonably high). If you can then raise the money to buy out his interest your mother can stay in the house.
7. Look at the Insolvency Service website. Among their booklets is one giving general advice on what happens to houses in bankruptcy.
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