Selling house with neg equity, legal procedure for paying balance outstanding?

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ipad

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Hi, would be grateful for opinions, especially from anyone involved in conveyancing.
Am in process of selling a house in negative equity and while I have enough cash to pay off the balance outstanding on the mortgage after the sale, I'm a bit reluctant about how this is done from a legal point of view. Will I have to lodge the balance with my solicitor? Given all the dodgy dealings with client funds over the years I'm not entirely confident of doing that so wondering if anyone has done it any other way ie paying balance outstanding direct to bank after sale goes through. (It;s a sort of delicate conversation to bring up with my solicitor which is why I'm asking here!)
 
Could you not pay off a lump sum from the outstanding mortgage balance now while it is for sale. You may pay less interest too while waiting to sell.
 
Don't want to do that in case sale falls through and I have to take it off market. Is at very good tracker so would prefer to keep use of cash.
 
Are the bank aware that you have the funds to repay the mortgage? If they're not, there may be some merit in trying to negotiate a deal with the bank whereby they take some of the pain.
 
don't sell then, especially if you're on a tracker. Use savings to make some overpayments every month (this reduces principal capital - big saving on interest).

also I would never give money to a solicitor for property to be sold. (what if there is unknown charges or judgements again the property?)
 
If the bank hold a charge over the property i.e. they hold the deeds they will not let the settlement of sale go through until all the money owing to them is paid in full first.
 
Yes Time the OP could negotiate a settlement figure on the amount still outstanding on the mortgage with the bank but to answer the original query....it will have to be done before the bank will allow the sale to go through.
 
The house is currently sale agreed and the sale should go through within the next week or so, so unfortunatley the bank know we have the cash so the negotiating a settlement is a non-runner. I was hoping that someone who'd gone through the same process might know the legal procedure or sequence of events. It's quite a substantial sum so I really don't want to pay off anything until I'm certain the sale will go through.
 
ipad said:
The house is currently sale agreed and the sale should go through within the next week or so, so unfortunatley the bank know we have the cash so the negotiating a settlement is a non-runner. I was hoping that someone who'd gone through the same process might know the legal procedure or sequence of events. It's quite a substantial sum so I really don't want to pay off anything until I'm certain the sale will go through.
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Then why didn't you try and negotiate a settlement? You could have saved yourself a substantial sum.
 
ipad said:
Hi, would be grateful for opinions, especially from anyone involved in conveyancing.
Am in process of selling a house in negative equity and while I have enough cash to pay off the balance outstanding on the mortgage after the sale, I'm a bit reluctant about how this is done from a legal point of view. Will I have to lodge the balance with my solicitor? Given all the dodgy dealings with client funds over the years I'm not entirely confident of doing that so wondering if anyone has done it any other way ie paying balance outstanding direct to bank after sale goes through. (It;s a sort of delicate conversation to bring up with my solicitor which is why I'm asking here!)
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I think that you are worrying unnecessarily here.

There have been some spectacular frauds by solicitors but the vast majority of house purchase and sales transactions go through without any fraud.

I presume that the solicitor must give the bank an undertaking that they will clear the mortgage with the proceeds of sale.
I presume that you will have to lodge the shortfall with the solicitor as soon as the contracts are exchanged.
When the sale is closed, the solicitor will pay over the proceeds and your money to the bank.

The biggest risk to you is that the purchaser will walk away before contracts are exchanged.
The next biggest risk is that they will exchange contracts, but not close the sale. You get to keep the deposit and have the right to sue them.

The risk that the solicitor will defraud you is negligible. If it does happen, the Solicitors Compensation Fund will refund you.

Brendan
 
ipad said:
Hi, would be grateful for opinions, especially from anyone involved in conveyancing.
Am in process of selling a house in negative equity and while I have enough cash to pay off the balance outstanding on the mortgage after the sale, I'm a bit reluctant about how this is done from a legal point of view. Will I have to lodge the balance with my solicitor? Given all the dodgy dealings with client funds over the years I'm not entirely confident of doing that so wondering if anyone has done it any other way ie paying balance outstanding direct to bank after sale goes through. (It;s a sort of delicate conversation to bring up with my solicitor which is why I'm asking here!)
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Have you told your solicitor that you are in negative equity? They should be rightly concerned if you have not - the consequences of you getting into a contract situation without resolving the matter in advance could be horrendous. Good that you have the money to discharge the balance of the mortgage. Bad that you don't understand the significance of telling your solicitor.


mf
 
Yes, the solicitor is aware of the negative equity, and has taken this into account. Didnt negotiate a settlement with the bank as stupidly had savings in same bank! My concern is that I pay the neg equity in advance and then either the sale falls through or the solicitor scarpers. Either way I'm not willing to commit 100k until I'm certain the sale of the house goes against the mortgage first, but wondering do I have a say in the matter.
 
Easiest solution would be to deposit the money with your solicitor. When he receives funds from the sale he can forward it all to the bank, if the sale fails no money is paid to the bank.
 
Time said:
Easiest solution would be to deposit the money with your solicitor. When he receives funds from the sale he can forward it all to the bank, if the sale fails no money is paid to the bank.
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This makes the most sense but to me also carries some risk as I don't want to write a cheque to some guy in an office for 100k and then if it all goes belly-up have to wait years for the Law society to sort it out etc. Strange times these and in view of whats going on in this country, sad to say its hard to trust anyone.
 
As I have already pointed out, the risk of default by a solicitor in a routine conveyancing transaction is extremely low.

You might as well not cross the street in case there is an earthquake and you fall into the hole.

Brendan
 
Ha, ha I know! But at least if that happens the wife gets to keep everything! ;)
 
ipad said:
The house is currently sale agreed and the sale should go through within the next week or so, so unfortunatley the bank know we have the cash so the negotiating a settlement is a non-runner. I was hoping that someone who'd gone through the same process might know the legal procedure or sequence of events. It's quite a substantial sum so I really don't want to pay off anything until I'm certain the sale will go through.
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Doesn't necessarily rule out a settlement. Call them and tell them you're thinking of buying a boat or even better a small plane and would like access to the funds shortly. They might be in the mood to negotiate then. You're under no obligation to repay the loan early using your capital but you're doing them a big favour by doing so. Especially seeing as you are on a tracker. Move your deposit if necessary.
 
jambo said:
Doesn't necessarily rule out a settlement. Call them and tell them you're thinking of buying a boat or even better a small plane and would like access to the funds shortly. They might be in the mood to negotiate then. You're under no obligation to repay the loan early using your capital but you're doing them a big favour by doing so. Especially seeing as you are on a tracker. Move your deposit if necessary.
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There'll actually now trying to force me to repay the neg equity BEFORE the sale completes (or buyers funds received), which leaves me in a very precarious position if the buyer pulls out! Am trying to get around doing this in case this happens but they're being extremely difficult about the repayment, let alone trying to negotiate a settlement!
 
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