# Credit union rights to sell property where they have deeds but no guarantee agreement



## Bronte (17 Feb 2012)

If a credit union loans out money to someone for say a business, and a relation lodges their deeds to a property, but nothing is signed, no personal guarantee document or any kind of document between the person who owns the deeds and the credit union, what is the right of the person who owns the deeds?  Can the credit union force the sale of the property by going to court without anything other than the fact they hold the deeds.  Is this enough to force the sale?

Can a contract be implied in this situation, that the person lodging the deeds agrees that the deeds are in lieu of the debt?  A verbal contract?

Do those who advance monies have to abide by laws in relation to guarantees, that the person handing over the deeds signs something and gets independant legal advice for example.  In this case it is an elderly person.


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## Slim (17 Feb 2012)

The holding of deeds by credit unions is more to prevent someone taking out a mortgage without their knowledge. It is an old fashioned concept that carries no legal weight as far as I know. In most cases, the credit union would execute what is called equitable deposit to secure the deeds but that has been phased out. The only legal mechanism now is a charge on the property taken out by the credit union. Deed holding per se doe snot empower the credit union to force sale or anything else. Deeds are an old fashioned concept as all property folios are copies, AFAIK, no doubt someone with legal knowledge/experience will comment.


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## coleman (7 Mar 2012)

Therefore Slim - would you think the person who handed over the deeds, without signing anything, when they ask the CU for their deeds back, that they should be given them without any preamble?


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## Slim (8 Mar 2012)

coleman said:


> Therefore Slim - would you think the person who handed over the deeds, without signing anything, when they ask the CU for their deeds back, that they should be given them without any preamble?


I'm sure the credit union may make a bit of a fuss and it would depend on what paperwork was signed, but based on your question, I would have to say yes IMHO.


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## mf1 (9 Mar 2012)

Slim said:


> The holding of deeds by credit unions is more to prevent someone taking out a mortgage without their knowledge. It is an old fashioned concept that carries no legal weight as far as I know. In most cases, the credit union would execute what is called equitable deposit to secure the deeds but that has been phased out. The only legal mechanism now is a charge on the property taken out by the credit union. Deed holding per se does not empower the credit union to force sale or anything else. Deeds are an old fashioned concept as all property folios are copies, AFAIK, no doubt someone with legal knowledge/experience will comment.



I found this interesting so I did some digging!

This is covered by Section 89(6) of the Land and Conveyancing Law Reform Act 2009

"(6) Nothing in this section affects the creation of equitable mortgages of land."

So it does still exist. And, depending on the circumstances, no, the guarantor may well not be entitled to take back their deeds. 

And Deeds are still vital - we have two separate systems of registration in this country - we are phasing out the old fashioned Registry of Deeds but it will take a very long time before we get to the stage where title deeds for all properties comprise only a folio!
The State could have opted to make us all go to the expense of registering our titles now but, given the furore that would have caused, they have opted to make all titles registerable on sale.  So every time a property is sold, if the title is not already registered, the Purchaser will have to do so.

But getting back to the original query......If the facts are as implied, elderly person, no legal advice, no actual agreement etc.,etc. then, if the CU did try and enforce the equitable deposit there may well be an arguable defence. It depends on the actual circumstances.  

mf


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## 44brendan (9 Mar 2012)

We still have a system of "Simple Deposits" and "Equitable Deposits" in place. However as previous poster has said some recent changes in Land Registry requirements are appropriate to the actual security affect of these to a Bank, or in this case a CU.
If the land was Registered in the Land Registry all historical Equitable Deposits were required to be registered as "Liens" with the Land Registry. the final date for doing this was Dec 2010. 
In the case of Unregistered Land the actual deeds of the property were handed over to the Bank/CU and this security remains valid. However no charge is actually registered over the property so effectively it just gives the Bank a right to hold the Deeds.


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## dewdrop (9 Mar 2012)

In my past working in a bank during sixties till nineties especially in rural areas security from farmers was nearly always by way of equitable deposit; also known as equitable mortgage or verbal deposit. When the person making the deposit of the deeds, usually a Land Certificate, he/she had to recite words written on a small card..." I hereby deposit with you an athorised official of x bank........for all my liabilities, direct or indirect, whether as principal or surety and so on....My memory fails me!.  Regarding the original query is not the key question whether the person is liable by way of guarantee or otherwise to the credit union.


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## Bronte (19 Mar 2012)

Thanks for all the replies and also for the digging MF1. 

It's a land registry title prior to 2010.  It's not the new Land Registry.  Deeds were sent by solicitor to credit union.  

The real problem is not actually them forcing a sale but the value will not cover the loan by a wide margin and borrower will still be liable.  Borrower and deeds owner have no other assets and are on social welfare.  

Would the property owner be entitled to legal aid to defend themselves against the credit union.  Ideal situation would be to get the credit union to accept the property as full and final settlement.

Would a cash offer work, what percentage would one have to offer?


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## Slim (19 Mar 2012)

Bronte said:


> Thanks for all the replies and also for the digging MF1.
> 
> It's a land registry title prior to 2010.  It's not the new Land Registry.  Deeds were sent by solicitor to credit union.
> 
> ...


Based on your original post and not being privy to the actual case, I would say there is very little chance the credi union could force sale of the property. Howevere, the relation that lodged the deeds may have gone guarantor on the loan and may be pursued equally or the loan as the borrower. In relation to settlement of the debt, this would entirely depend on the particular CU and their policy on that. A settlement for cash may well be favourably received.


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## Bronte (16 Aug 2012)

Slim said:


> . A settlement for cash may well be favourably received.


 

This worked out very well.  I know people like to know the end of a story, some hard negotiation and deeds secured and debt partly paid and remainder written off.  It was a high percentage write down.  Moral argument was tried but rebuffed.  

Was informed that there are loads of people who had 'forgotton' they signed guarantees (not the case here) and are paying up on foot of these.


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## Slim (29 Aug 2012)

Good to hear the resolution of a case. Cheers.


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