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Clare
Clare, Solicitor
Category: Property Law
Satisfied Customers: 33313
Experience:  I have been a solicitor in High Street Practise since 1985 with a wide general experience.
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HelloI own a property with my ex that is in negative equity

Customer Question

Hello
I own a property with my ex that is in negative equity due to a 125% Northern Rock mortgage. The only reason my name went on the mortgage was to help her out c 10 years ago. I have never paid anything towards the property and have not been with her for c7 years. I am now married to someone else and wish to take my name off the mortgage however Northern Rock will not agree to this as she has a bad credit rating (although has never defaulted on the mortgage). I have been told it is possible to put in place some form of deed between myself and her, that stipulates, whilst I am still on the mortgage and the deeds, we both agree on a percentage split that each of us is liable should it go wrong. Im not sure what this is called - I have seen the terms Partnership Agreement, Quitclaim Deed and Warranty Deed - im not sure if any of these could help?
Any advice would be greatly appreciated. Ultimately I want my name of the mortgage. That seems to have failed therefore I want to try and limit the amount of debt that I am liable for, whether that is 50/50 or whether we are able to discuss and quote our own percentages that both are happy with.
I hope you can help or offer some type of advice.
Thanks
Submitted: 3 years ago.
Category: Property Law
Expert:  Clare replied 3 years ago.
Hi
Thank you for your query I will try and assist.
How much is the house worth and how much is actually outstanding on the mortgage?
Claire
Customer: replied 3 years ago.


The flat is worth c£60k at very best - more likely £50-55k. There is a mortgage of around £80k (which was a Northern Rock 125% home starter mortgage) and then a personal home improvements loan of £22k tacked to the side of it.


Thanks

Expert:  Clare replied 3 years ago.
Hi
I have to ask - I assume that she does not have any assets that could cover the shortfall?
Claire
Customer: replied 3 years ago.
No unfortunately not. Just other credit card debts and a CCJ as far as I'm aware. Things are tight to make ends meet each month however I do know that she hasn't defaulted on the mortgage . I believe she may have been a day or two late paying utility bills in the past but is not in arrears. Her staying in the property is preference, as she doesn't want to be homeless as well as carrying the excess debt on top of what she already has. On the whole it's amicable but we both want to go our separate ways and I am desperate to sever all ties.
Expert:  Clare replied 3 years ago.
Hi
is your ex willing to accept full responsibility for the shortfall in return for you not forcing a sale?
Claire
Customer: replied 3 years ago.
She would not be prepared to accept full responsibility without me making some kind of financial contribution or capital reduction. She feels hard done by as our relationship broke down, I left and got married to someone else and she is left with a house in negative equity. I initially tried to offer an amount to the mortgage company to reduce the capital if they released me from the deeds. They wouldn't specify an amount that they would be prepared to accept and were generally unhelpful. I don't want to pay anything directly to her but don't mind paying something to help reduce the debt and her outgoings (provided I can get my name off the mortgage in the process)
Expert:  Clare replied 3 years ago.
Hi
I suspect I know the answer but I assume that you have no wish to take over the property?
Claire
Customer: replied 3 years ago.
The only situation where she may potentially allow me to do that, would be to take on the whole house and the whole debt, which puts us at a worse position than we are now. The house value is not likely to ever recover the level of the debit owed on it.
Thanks
Expert:  Clare replied 3 years ago.
Hi
I am afraid that your options then are limited and your chances of being removed from the mortgage in the neat future is remote.
Whilst you can apply to the court for an order for the sale of the property this woudl only be worthwhile if you were in a position to cover the shortfall on the mortgage and sale costs.
You can use a Declaration of Trust to set out what the financial agreement is between you and your - this is the document that you are describing in your question.
However you do need to understand that so far as the Mortgage Company is concerned there is nothing you can do to limit your liability for any shortfall in the event that your ex goes bankrupt - or the property is repossessed for any reason.
If you ex goes bankrupt the Declaration of Trust will also be useless I am afraid - if she does not then she will owe you whatever her share is - but that will only be worthwhile if she has assets or income she can use to pay you
Claire
Customer: replied 3 years ago.
Is there anyway we can change the ownership of the property to tenants in common via a solicitor?
Expert:  Clare replied 3 years ago.
Hi
May I ask why you would wish to do this?
Claire
Customer: replied 3 years ago.
I was thinking that would mean that the debt ownership would be split 50/50 too but I believe I'm mistaken.
I can't believe there is nothing I can do to limit the threat of having £102k dropping onto my lap at any point that she decides she's fed up. This is preventing me from moving forward as I'm concerned to commit to a further mortgage with my wife with this potential disaster right round thr corner
Expert:  Clare replied 3 years ago.
Hi
I am afraid that whether you own it as Joint Tenants or Tenants in Common will not effect the monies due to the Mortgage Company.
The real risk is not that your ex decides she no longer wishes to live there - she remains as liable for the debt as you do and even if the mortgage company comes after you alone you can still recover monies from her - especially if you do go with a Declaration of Trust.
Your real problem is if she goes bankrupt when the debt will indeed land in your lap.
Unfortunately there is no way around this.
I do however suggest that you speak to a mortgage broker - there is little point in not moving forward if you can
Claire

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