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Joshua
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 25408
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I am in the process of buying a house with my husband. He has

Resolved Question:

I am in the process of buying a house with my husband. He has recently (within the last 12 months) become self employed and therefore has no provable income at this stage. We sold our last house in May 2013 and are currently renting. He contributed towards the mortgage at our last property and both the house and the mortgate was in in joint names. The equity released from the sale of the last house is forming the deposit on the new house. To summarise, the deposit being used to buy the new house is from both of us, but the mortgate, for just under 85% of the value of the new house is just in my name. I wanted the new house to be under joint ownership and our bank, HSBC (First Direct) will allow this but recommend he obtains legal advice. We don't understand what he needs to be advised on and what our position is actually called in legal terms. Can you help?
Submitted: 3 years ago.
Category: Property Law
Expert:  Joshua replied 3 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 you obtained your mortgage through a broker or direct through the bank please?

Joshua :

Would I be correct to presume that the bank are refusing to lend to your husband given his status until he has 2 or 3 years of accounts behind him but nevertheless will allow him to be jointly named on the mortgage?

Customer:

Hi, the mortgage is direct with the bank. The mortgage is in my sole name. He will not be jointly named on the mortgage due his employment status. I would like the house to be in our joint names however.

Joshua :

Thanks. From what you say the bank are agreeable to him being a joint owner of the property although they will not allow him to be a party to the mortgage?

Customer:

Yes that is correct but they require him to obtain independent legal advice to ensure he understands what this would mean, presumably should I default on the mortgage in the future.

Customer:

I'm not sure what we need to ask for - is our situation known as something in particular?

Joshua :

Thanks.

Joshua :

HSBC is relatively unusual in that it allows in certain circumstances different legal owners to borrowers under their mortgages. Most high street banks require (for policy rather than legal reasons) for legal owners to be the same as the borrowers.

Joshua :

There are two ways to deal with this situation. The first is by proceeding on the purchase in your sole name and then executing a simple bare trust after the event with your husband expressing that you own the property as to 50% for you and 50% for him. The second option is to have him as a joint legal owner which is the option you are presently exploring with the lender.

Joshua :

If you proceed with this option the lender will require your husband to confirm that he places his interest in the property behind the lenders in the event that the lender reposesses the property. This is to ensure that your husband cannot defeat the lender in their effort to repossess the property which otherwise he may be able to do as a joint owner. To ensure that your husbands interest is properly put behind the lenders it is necessary for the lender to show that your husband understood what he was signing when he agreed to do so. This is because there was a big case a few years ago where a wife signed something as proposed here and later claimed that she did not understand what she was signing and the lender was prevented by her from repossessing their property.

Joshua :

The lender will send a document for your husband to sign to say that he is content to put his interest behind the lenders in the event of repossession and will require that he visits an independent solicitor to sign this so they can explain the nature of the document he is signing and sign a certificate to confirm that they have given him this advice. This is a straightforward process but will require him normally to attend a local solicitor separate to that acting for the mortgage and will incur an additional fee. Not all solicitors will be willing to provide the above advice but many will.

Joshua :

Is there anything above I can clarify for you?

Customer:

Is the procedure you describe called anything in particular so that when we contact a local solicitor we know what to ask for? We are concerned that unless we are very specific about what it is we need we may end up paying more than we need to?!

Joshua :

Yes. Some lenders call it a "Deed of Postponement" and others call it an "Adult Occupiers Consent". Solicitors will be familiar with both terms. HSBC have a very specific (simple) procedure they require followed and will on request send through documents for the chosen solicitor and your husband to sign. From memory they require a deed of postponement to be signed by your husband and the solicitor to first explain the nature of the document and then sign a certificate to confirm they have provided this advice to your husband.

Joshua :

Is there anything else I can help you with?

Customer:

Thank you Joshua, you have been very helpful.

Joshua :

A pleasure. If I can assist any further as the situation develops please do no hesitate to let me know.

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 though please reply back to me though.

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