# Negative equity - can you walk away?



## rogeroleary (6 May 2009)

I was talking to someone in work earlier and he told me he has 3 investment properties worth about €1 million at present . However he has mortgages of around €800,000 on these properties. When I asked if he was off loading them to cash in he told me he wasn't and if the worst came t the worst ie. they went into negative equity he would just give the keys back to the bank.

Seeing my amazment he explained that there was no lien on his own private residence from these properties his home could not be repossessed. 

When I thought about it I was still bemused that he could have NO liability except for the properties themselves. Surely this is only the case if you have set up a limited company which limits your liability? I would have thought if the properties dropped to say €500k then the  banks would look to recoup the difference between the mortgage and the value ie. €300k? Am I missing something here?

Rog.


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## Brendan Burgess (6 May 2009)

No, you are not missing anything.

Your friend is making a mistake which a lot of people make. 

The banks would get a judgement against him for any shortfall and probably register it on his home.

Brendan


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## rogeroleary (6 May 2009)

Thanks Brendan, I won't bother spending any more time on myhome.ie trying to increase my portfolio so 

Roger


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## robinho (9 May 2009)

Brendan is wrong. 

Some of the main banks will be very reluctant to write off the balance of the arrears and just let you hand back the keys. However, some of them actually will agree to taking back the house and the keys.


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## dewdrop (10 May 2009)

Robinho i do not understand your response. Brendan is correct. Any shortfall will be most likely registered as a Judgment Mortgage against any property which debtor owns and in event of sale of such property this Judgment Mortgage will have to be cleared before any purchaser will accept title


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## Complainer (10 May 2009)

But the family home would not be repossessed in such a case - right?


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## mf1 (10 May 2009)

Complainer said:


> But the family home would not be repossessed in such a case - right?



Wrong. I'm afraid that there is a very common misconception that the Family Home is inviolate. Its not. Certainly, on a forced sale of the Family Home, the non defaulting owner is entitled to their share of the proceeds, assuming that there is sufficient funds to clear any mortgage on the Family Home,  but the other share ( the defaulters) will be taken by the Bank. 

mf


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## mathepac (10 May 2009)

While the bank might not repossess the home, ownership could not be transferred by way of sale or inheritance until the judgment mortgage is satisfied.


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## K-Man (11 May 2009)

mathepac said:


> While the bank might not repossess the home, ownership could not be transferred by way of sale or inheritance until the judgment mortgage is satisfied.


 
Yes - but the judgement mortgage would not necessarily be satisfied until the guy either decides to sell up, or potentially when he dies in 50 years time.


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## Bronte (11 May 2009)

OP I'm amazed that someone who has managed to accumulate 3 investment properties and mortgages of 800K is so naive.


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## Raskolnikov (11 May 2009)

mf1 said:


> Wrong. I'm afraid that there is a very common misconception that the Family Home is inviolate. Its not. Certainly, on a forced sale of the Family Home, the non defaulting owner is entitled to their share of the proceeds, assuming that there is sufficient funds to clear any mortgage on the Family Home, but the other share ( the defaulters) will be taken by the Bank.
> 
> mf


Indeed. Oisin Fanning of Smart Telecom will testify to that.


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## BRICKTOP (11 May 2009)

The only time you can walk away for a mortgage obligation is if you have a non-recourse mortgage, this is where your liability to the lender is limited to the loan on the property, and this loan is secured on that property. Rare in this country.


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## Bronte (11 May 2009)

Raskolnikov said:


> Indeed. Oisin Fanning of Smart Telecom will testify to that.


 
What are you referring to?


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## Raskolnikov (11 May 2009)

Bronte said:


> What are you referring to?


The former CEO of Smart Telecom. His family home was repossessed after he was unable to make repayments on an investment loan. Proof that a judge will grant an order against a family home.


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## Complainer (11 May 2009)

Raskolnikov said:


> The former CEO of Smart Telecom. His family home was repossessed after he was unable to make repayments on an investment loan. Proof that a judge will grant an order against a family home.


The loan *was *secured on the property, according to press reports - see http://www.independent.ie/opinion/a...-bite-itself-on-its-ample-bottom-1622866.html


> Sadly, though, the court didn't agree, and last Thursday, Anglo Irish Bank, which has a pretty limited earning capacity of its own at the moment, was granted a repossession order by [broken link removed], who pointed out that Mr Fanning and his partner, [broken link removed], had signed all the documents *agreeing to the terms and conditions of the loan whereby their home was put down as a security.*


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## gearoidc2 (28 May 2009)

If the family home was not taken out jointly e.g. was the property of the wife before they got married and no share in it has been "signed over" in any way to the husband (who has now got "mortgage judgement" against him) is family(wife's) house safe in that instance?

Put simply do individual debts incurred before marriage become shared debts after marriage??


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