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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25646
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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My uncle died in 2013 and left my aunt with a mortgage of £110K

Resolved Question:

My uncle died in 2013 and left my aunt with a mortgage of £110K and no insurance, no pension no assets etc just a heap of debt. My mom was named as the executor of the will and has dealt with all the debtors, most have written off the debts but there are just 2 restrictions left on the property; both in my uncles name. £12K & £10K each. My aunt has no means of paying off the mortgage (this is in her name). She has nothing. She has to sell the house. The house is worth approx £160K. If she sells, half the equity will go to my uncles estate and be used to pay off the £22K in restrcitions. This will leave her with just £20K ish, no home and she is in her 60's with severe arthritis, no savings, no pension,just a small income from her job as a shop cashier which covers her bills and interest payments on the mortgage. My parents are considering selling their own home and buying my aunts house so the mortgage can be paid off and all 3 of them live in the house together (they are also both in late 60's). Their home was valued at £107K. The family may be bale to raise the extra £3K to clear the mortgage but not enough to clear the restrictions. Is it possible for a sale to proceed on this basis? What would happen with the restrictions? I assume my mother as executor would just write to them and say that the property was sold at £110K and there is no equity in my uncles estate to pay them? Could they stop the sale going ahead? This the only way as a family we can see to helping my aunt to keep a roof over her head and pay off the mortgage.
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I ask if as part of the proposal the family would propose to pay off the remaining debts as and when possible in the future when funds permitted if the sale and purchase described goes aead?

Joshua :

*ahead?

Customer:

Hello Joshua

Joshua :

Hello

Customer:

No I dont think this is possible as they have already had to pay out so much to help her. Once my dads house sells he has no further funds available and the family have stretched as far as they can.

Joshua :

Thanks. the effect of the restrictions on the title prevent any disposition of the property without consent from the restriction holders. A disposition will include a remortgage, sale - essentially any sort of dealing with the property.

Joshua :

Accordingly, you would need the consent of the restriction holders in order to proceed with the proposal. The key to obtaining their consent is clever negotiation - namely persuading them that agreeing to you proposal will be more beneficial than not.

Joshua :

The difficulty I foresee is that the proposal is essentially to purchase the property at less than market value. Therefore, the problem will be that the creditors that hold the restriction will likely see that by holding out they may be able to realise their debt in full from any eventual sale of the property. The only advantage therefore to them would be your persuasion that some money now is better than all of the money potentially in a very long time

Joshua :

The extent to which such an argument would be persuasive would probably depend largely upon any amount of money that could be offered to them now. If little or no money is able to be offered to them and there is unlikely to be an advantage to them and agreeing.

Joshua :

Was the property in joint names or just your uncles name?

Customer:

joint

Joshua :

Thanks and the debts to which the restrictions relate were just your uncles debts and not your aunts?

Customer:

correct

Joshua :

It is important to remember that your aunt is not liable for any of your uncles debts that were in his sole name. It follows that any restrictions against the property only operate against your uncles share of the property which will be 50% in the absence of any agreement to the contrary. If the property is worth £160 then your uncles share will be £80K less a half share of the mortgage on the property (£55K) so the total equity available to creditors will be £25K without any costs of sale etc. .

Joshua :

They have no claim on your aunts £25K of equity in the property at all. I do not pretend that this significantly improves the position but it does improve upon the position slightly.

Joshua :

Is there anything above I can clarify for you?

Customer:

When my uncle passed away the mortgage was in joint names. That is now solely in my aunt's name and the restrictions are in my uncle's name. I assume therefore that a sale would result in the mortgage being paid off first then any equity thereafter being split 50/50 to my aunt & uncle's estate repectively? It would result in the same £25K each. Is this correct?

Joshua :

Based on the valuations you give that is exactly right. The restrictions unlike the mortgage are only effective against your uncles share of the equity.

Customer:

Also how would the holder of the restriction know whether the house is worth £160k or £110k? How/when might they they contest the value?

Joshua :

They can ask for a formal valuation for example from an estate agent during course of negotiations if they wished.

Customer:

Thank you. So if the offer of £110K was accepted and my aunt consulted a conveyancer to proceed I assume at that point the solicitor would have to contact the restriction holders and take it from there?

Joshua :

Exactly so. My suspicion would be that the restriction holders, having a claim to your uncloes £25K would seek to hold out for at least a percentage of that debt and would oppose any proposal that was not advantageous to them. The offer of some money now rather than mor money later can be very attractive to creditors but obviously no money now is unlikely to hold much sway.

Joshua :

Does the above answer all your questions or is there anything I can clarify or help you with any further?

Customer:

Thanks Joshua. You've answered everything.

Joshua :

If I can assist any further as the situation develops please do not hesitate to revert to me

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

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