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mortgages


mohikan22 10 2.3k 1 United Kingdom
7 Jun 2012 9:40AM
Hi all, any mortgage people about (UK) from our vast members? i am in a joint mortgage with my partner(unmarried) and her father, we own a third each. he has paid nothing in nor towards the mortgage. he was just " a guarantor" for us to get a mortgage 10.5yrs ago now.He was in name only which we were all happy about. Sadly he has passed away recently so now part of our house becomes his "estate" passed to his two sons and my partner. receiving a third of a third i believe.,....Now if a brother well call him Simon decides he wants to change this or that, get this done, get that done.. how does that work? I assume we can then say "you pay into the mortgage then etc etc...? the other brother "James" is happy to go with his father and do nothing, in fact if he could he would sign it over to us.(thats his style)
thanks.
Matt

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cats_123 e2
10 4.2k 25 Northern Ireland
7 Jun 2012 9:48AM
The position has changed so you have to do something, if nothing else advising the mortgage company/insurers. Sounds a bit complicated and depending on the value of the estate there may be IHT/CGT implications. Sounds as though you need an accountant who specialises in property.
mohikan22 10 2.3k 1 United Kingdom
7 Jun 2012 9:49AM
meeting with the mortgage people today, the house has been valued for probate (deceased estate).
mikehit e2
5 7.1k 11 United Kingdom
7 Jun 2012 9:50AM

Quote:change this or that, get this done, get that done


I presume you mean with regards maintaining the property?

Guaranteor has a very specific role in loan agreements and is not that same as a co-signatory. This may help to kickyou off:
http://www.bankrate.com/brm/news/mortgages/20050608a1can.asp


Quote:Co-signer versus guarantor
People often use the terms guarantor and co-signer interchangeably, but they have very different responsibilities and rights. A co-signer is basically a co-owner -- he is registered on the title and is equally accountable for payments (although it's often a given that he will not make the payments).
A guarantor, on the other hand, personally guarantees payments will be made if the original applicant defaults, but he has no claim to the property because he is not on title.

strawman 11 22.0k 16 United Kingdom
7 Jun 2012 10:03AM
First piece of advice call Citizens advice to check this out. It can be very complex.

But to my knowledge if all 3 of you are named and own 1/3 each that is it. They are entitled to 1/3 of the value of the house after the mortgage remaining debt has been deducted. They could force a sale of the property and split it 3 ways (you your partner and his estate) after the remains of the mortgage has been cleared. Or you could make a cash offer for the value left to buy them out. So the house value minus the outstanding mortgage then multiply it by 2/9 for a fair payment to the two brothers.

But what should be good news (check with citizens advice/Lawyer it all depends how you set up the mortgage). To cover the mortgage did you not have life insurance cover assigned to the mortgage? If yes then you can call that money against the mortgage and use it to close the mortgage. then you two re-mortgage in your names only and borrow an amount equal to 2/9 of the house value and give that to the brothers. Or had something of suitable value been assigned to act as equity against the mortgage. Or if his life cover was only equal to 1/3 of the mortgage. It will all revolve around how the mortgage was specified/set up.

I do not think you can force him to pay into the mortgage, but he could force you to sell or settle up. So could you afford to buy your brothers out. The question is whether you can get the mortgage payment (or investment) moved up higher in the list of payments. i.e would the investment/life insurance have to be used to clear the mortgage first before it goes into the estate, or would it go into the estate and then they clear his part of the mortgage and split the rest 3 ways.

But first and foremost get down to Citizens advice or if you are flush a lawyer for advice. And try diplomacy and asking him how he feels.
strawman 11 22.0k 16 United Kingdom
7 Jun 2012 10:05AM

Quote:Guaranteor has a very specific role in loan agreements and is not that same as a co-signatory.
True but the info given is he had 1/3 ownership so the estate has a call on he property.
mohikan22 10 2.3k 1 United Kingdom
7 Jun 2012 10:10AM
it is our house, myself and my partner with our two children, how could he force us to sell if we are still living in it?
779HOB 2 1.1k United Kingdom
7 Jun 2012 10:18AM

Quote:in fact if he could he would sign it over to us.(thats his style)


But he didn't - now the estate owns it - highlights the importance of a good will.
mohikan22 10 2.3k 1 United Kingdom
7 Jun 2012 10:22AM
sorry, yes the estate owns it at present but the "third" he owns becomes split between his sons and daughter, aft IHT etc etc. effectively they become a third of a third each. and the brother "james" would happily sign his third of a third over to us.,.
779HOB 2 1.1k United Kingdom
7 Jun 2012 10:25AM

Quote:would happily sign his third of a third over to us.,.


Sorry - I didn't read it like that, my fault.
strawman 11 22.0k 16 United Kingdom
7 Jun 2012 10:39AM

Quote:It is our house, myself and my partner with our two children, how could he force us to sell if we are still living in it?
Because strictly speaking it is not your house, you entered into a sharing agreement so own a portion of it, and on breaking up the sharing agreement one option is to sell. Most people would rather have a settlement, but that means you in effect have to buy the other parties out, unless they want to continue the mortgage and the lender allows it.

Also you need to check with the bank on the mortgage now that the guarantor is dead, I would expect they had a call on life insurance or some other item of value. That needs to be resolved first. They may not be prepared to continue with the existing mortgage, they may not. I do not think you can force the brothers to pay intro the mortgage or walk away without monetary compensation, it is not fair. They may offer you to keep it with them owning 1/9 each but not pay into the mortgage.
mohikan22 10 2.3k 1 United Kingdom
7 Jun 2012 10:55AM
Thanks for the info and advice all, now we have something to go on and in hand with. (ahah more questions than answers too) its all so complicated Grin

matt.
thewilliam 6 4.8k
7 Jun 2012 11:03AM
You need to check whether the three of you owned the property as "joint tenants" or as "tenants in common".

One of them means that, when one of the owners dies, his/her share is lost to the surviving partners. Older couples generally own their home this way because it makes life easier when one dies.

The other means that a dead partner's share forms part of the estate to be distributed under the terms of the will. I can't remember which is which so you'll need to look it up in Wikipedia or similar.
mikehit e2
5 7.1k 11 United Kingdom
7 Jun 2012 11:07AM

Quote:I do not think you can force the brothers to pay intro the mortgage or walk away without monetary compensation, it is not fair.


I think that is why advice of them mortgage company is only part of the situation - OP may also need advice of a contract lawyer. Remember that the mortgage company is only interested in whether they will get their money back and they don't give a rat's ass how the money gets to them. Mohikan's needs are different.

If you think about the infamous 'palimony' cases, whether one of the parties contributes to payment and/or maintenance is instrumental in deciding rights on the property (whose deeds are still owned by the mortgage company) so it risks becoming quite complicated. The fact the father never contributed, the son may never contribute and the original intention of having the father on the mortgge agreement may (I repeat, may) all have a bearing on the outcome especially if it is clear that your incomes mean a guarantor/co-signatory is no longer needed.
I am absolutely sure that the brother cannot make them sell while children are living in the house because even in a divorce, the departing partner cannot do that. So the chances of a minority non-contributing shareholder forcing the sale are IMO nil.

I really hope you manage to sort this out without too much bad blood. Families and money can be an awkward mix at the best of times.
mikehit e2
5 7.1k 11 United Kingdom
7 Jun 2012 11:08AM

Quote:You need to check whether the three of you owned the property as "joint tenants" or as "tenants in common".

One of them means that, when one of the owners dies, his/her share is lost to the surviving partners. Older couples generally own their home this way because it makes life easier when one dies.

The other means that a dead partner's share forms part of the estate to be distributed under the terms of the will. I can't remember which is which so you'll need to look it up in Wikipedia or similar.



A very good point.

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