# securing main residence from investment property banks



## sunhill (11 Mar 2012)

My main family home (4 bed detached) is on a tracker with NIB on a current loan to value of about 50%. I have 5 other investment properties which are all in negative equity three with KBC( trackers)and two INBS (now IBRC which are variable mortgages. My query is can either of the investmenmt property banks force me to move to smaller house and to sell my main home and use the balance to pay down my loans ?

If I paid off this loan completely could they force me to sell and move and give them the balance ? 

A possible solution i thought of was pay most of the loan and leave a small balance and re schedule it back over twenty years and ask the bank to put a clause in the contract that they would not force me to sell my house at the request of another financial institution during the new 20 20 year period ?

sunhill


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## Brendan Burgess (12 Mar 2012)

If you default on one of your investment properties, the lender may get a judgement against you. 

They could then register this judgement against your home or any other property. 

This would then become a judgment mortgage. 

I don't know if they could force you to sell the property, but I assume that they could. 

If you are in arrears on your investment properties and you have a total of 6 properties, you should be considering selling the one which is in positive equity and using the net proceeds to pay down the others or to do a deal on them. If you have a low cost tracker, they might give you a discount for paying it off early.


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## sunhill (13 Mar 2012)

*securing main residence*

Hi Brendan

Thanks for your reply.

Just to clarify:-
1. My family home is with NIB on 0.5% tracker and is on capital & interest due to paid paid off in 2021
2. The 5 investment props (2 with INBS on 4.5% var and 3 with KBC on 0.9% trackers) are not in default and i am paying interest only on the INBS loans and interst and fixed capital on the 3 KBC Loans as agreed with both institutions.
3I didnt think that a bank could force you to sell your family home if loan is with a diferent lender ?
4 the main purpose of the thread was to see how I could protect the family home in the event of a possible default of one of the investment props and a possible solution i thought of was pay most of the loan and leave a small balance and re schedule it back over twenty years and ask the bank to put a clause in the contract that they would not force me to sell my house at the request of another financial institution during the new 20 year period ? is this plausable ? what do you think ?

I look forward to your reply 

Thanks


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## mf1 (13 Mar 2012)

"is this plausable ?"

No. 

All property is just bricks and mortar - just assets. A "family home" has little additional protection by virtue of being a "family home". It is still just bricks and mortar - just an asset. 

The only way of protecting  your family home against possible "cross contamination" because of  default on other debts would be to transfer it to someone else. If it does not belong to you, it cannot be subsequently touched by your other debt.   But your lender would have to agree unless you could discharge the entirety of the mortgage debt. And, if the transfer was done to evade your creditors, it could be set aside.  

It comes down to leverage - a creditor that does not have a charge or a judgment against you cannot attach a charge on your family home but they could suggest solutions ( i.e. sell the family home, pay off debt on other properties and move into one of the investment properties) failing which they could pursue the debt.

mf


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## sunhill (13 Mar 2012)

Thanks MF

With epsect what is your background MF ? are you a solicitor/have legal background ? if not how can i have any confidence in your reply ?

I would apprecite a response from a legal/banking person and also from Brendan.

Thanks.


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## mf1 (13 Mar 2012)

See this Disclaimer. 

"Askaboutmoney is a discussion forum. The contributors may or may not be qualified or authorised to offer advice.

We make every effort to correct misleading information and to give a balanced variety of opinions.

We accept no liability for any loss arising from action taken on the basis of information on the site.

Before making a financial decision, you should independently verify any information you have got from the site.

For complex financial or tax decisions, you should consult a professional advisor who will take into account all the necessary personal circumstances of your case."


mf


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## Brendan Burgess (13 Mar 2012)

sunhill said:


> Thanks MF
> 
> With epsect what is your background MF ? are you a solicitor/have legal background ? if not how can i have any confidence in your reply ?
> 
> ...



When I have a question like this, I ask MF1  

Brendan


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## sunhill (13 Mar 2012)

Thanks Brendan - I presume you are giving the thumbs up to MF1.

I summary MF1/Brendan your solutions are 1. sell my family home, pay down rental mortages and move into one of them which i cant do as i cant move a wife and 3 kids into a 2 bed apartment or 2. pay down the main family home mortage and transfer it to some one else which my understanding the banks can reverse if they challenge any time within 5 years of the transfer i.e the property has to be in the other persons name for more than five years.

Option 1 isnt a solution and option 2 is a risk for 5 years that could be reversed ? any other solid ideas ?


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## Importer (14 Mar 2012)

With six substantial properties hanging around your neck like a noose, Id be getting some professional "paid" advice in the near term.........


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## dereko1969 (14 Mar 2012)

If you're not struggling with any of your payments how is this an issue for you at the moment?

Are you planning on defaulting on the investment properties?


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## orka (14 Mar 2012)

Yes, I don't understand the issue either - particularly if you have enough cash to be talking about paying off your family home mortgage even though it's got 9 years left to run.  If you have a lump sum available for this, why not use it to pay down some of the negative equity on the investment properties?  Or invest it and use it over time to supplement the repayments on the investment mortgages.


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## sunhill (14 Mar 2012)

Thanks Derko 1969 and Orka.

It is not an issue at the momemt.

I am not planning to default on any of my mortgages.

I am simply 'thinking ahead' of A. The day i Might loose my Job and B. the certainty of when interest rates rise as highlighted by Brendan McWiliams in his article on the sunday business post. he sees inflation and high interest rates, possibly as high as the 80's as a result of all this cheap money being pumped into the banks/economies around the world.

I operate by the phrase "fail to plan is to plan to fail" and in the event of me losing my job or/and high interest rates I want to be able to protect my family home. 

I dont have enough cash to pay off the family home mortage i could however try and aincrease the monthly payments but no point doing this if the banks can take it off me in the event of default of my investment props.

I look forward to your replies.


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## Bronte (19 Mar 2012)

I wouldn't be in any hurry to pay  off the home loan.  You are paying off the KBC loans with capital and interest so there must be an end year ?  

What about the 3 INBS loans that you are only paying interest only on.  How long is this agreement for.  Is there anything you can do to repay capital?

Does the rent on all properties pay the mortgages?  Do you have equity in any of the properties.  Would you be wiser to extend your home loan and reduce payments in order to pay down the investment properties.  

Without all the facts and figures it's hard to figure out the best solutions.  What was/is your long term plan in relation to the investment properties.


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## sunhill (20 Mar 2012)

Hello Bronte - my replies below in bold.

I wouldn't be in any hurry to pay off the home loan. You are paying off the KBC loans with *(part)*capital and interest so there must be an end year ? *varies to 2031
*
What about the 3 INBS loans *(2 not 3)*that you are only paying interest only on. How long is this agreement for *(1 is for 2021 the other is permanent interest only but INBS is now part of IBRC and is due to be wound up in 2020)*. Is there anything you can do to repay capital

Does the rent on all properties pay the mortgages? *(the rent is covering what i am doinfg at the moment but going forward with higher property tax etc i will have to supplement just to pay the interest.)*Do you have equity in any of the properties*. (No)* Would you be wiser to extend your home loan and reduce payments in order to pay down the investment properties. *( I dont know if NIB would let me do this, but current negative equity gap on investment props is over 500K so i dont know if it would be worth it)
*
Without all the facts and figures it's hard to figure out the best solutions. What was/is your long term plan in relation to the investment properties. 

Hope this helps for further advice


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## Bronte (21 Mar 2012)

Being logical I cannot see how you can protect the family home.  Your negative equity on the investments alone is horrendous.  You have no way of paying back capital on at least one of these.  Variable rates can and probably will rise as banks get to grips with the bad debts.  Rents may drop, and for sure the governement is targeting landlords.  

You have to stop thinking of the family home as something that can be protected.  Remember that if you lose this family home you are only losing a house, your home will be where your family is whether you own it or rent it.  This is a difficult concept in particular for Irish people.

Not trying to be too negative but the only hope you have is that the new insolvency legislation will help you for that, but currently any of the banks would go after your family home if you default on the investments.


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## spiker (21 Mar 2012)

after reading sunhills queries i find some of the responses confusing, correct me if i am wrong but he never said if his wife was a signature on the investment properties and if not the banks could not force a sale of the family home.


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## sunhill (21 Mar 2012)

Thanks Spiker and Bronte.

To confirm my wife is not on any of these loans. Is that correct spiker that the banks cant force the sale of the family  home if my wife is not a signatory on the investment loans. I would appreciate your response.


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## spiker (21 Mar 2012)

As your wife is not liable for your investment loans it is almost impossible for the bank to force a sale of the family home, completely unheard of in our juristiction no judge would entertain or no bank would try.


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## mf1 (21 Mar 2012)

spiker said:


> As your wife is not liable for your investment loans it is almost impossible for the bank to force a sale of the family home, completely unheard of in our juristiction no judge would entertain or no bank would try.



This is nonsense! From a new poster. 

The family home is just bricks and mortar. End of. 

It is an asset that can be attached.

mf


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## sunhill (22 Mar 2012)

Dear Mr Burgess,

I dont know if you have been following my thread - but can you interject and shed some light. Spikers last thread says it would be impossible for the bank to put a judgement on the family home and mf says this is nonsense - 2 very conflicting views.

Can you tell me who is right and who is incorrect please


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## Luternau (26 Mar 2012)

I would say you should re-read posts 6,7 and 9 again. Judging by the question(s) you are asking and reasons for asking, you need to get professional advice. Good luck with whatever you choose to do.


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## Bronte (27 Mar 2012)

sunhill;1251585 but can you interject and shed some light. Spikers last thread says it would be impossible for the bank to put a judgement on the family home and mf says this is nonsense - 2 very conflicting views.
 
[/QUOTE said:
			
		

> MF1 is corrrect, not Spiker.  Just look at all MF1's excellent and accurate posts.


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## Steve Thatcher (27 Mar 2012)

I am legally qualified. The answer is that if you default on your investment properties you could be subject to a monetary judgment. That judgment can be secured against any asset of yours, ie your family home. Once there it would be possible at least for the judgment creditor to ask the court for an order for sale. Now whether the court would grant it is another matter and one for judicial discretion subject to established case law.

Steve


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## 44brendan (27 Mar 2012)

Fully accurate Steve, but to be fair cases of JM holders progress to Well Charging orders and orders for sale are extremely rare in RoI. It is expensive, extremely slow and I have yet to see one through to conclusion.


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## sunhill (28 Mar 2012)

any chance of a reply Brendan Pleae ?


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## 44brendan (28 Mar 2012)

mf1 said:


> This is nonsense! From a new poster.
> 
> The family home is just bricks and mortar. End of.
> 
> It is an asset that can be attached.mf


Yes I agree, but with reservations. You have an interest in your family home, whether or not your name is on the title deeds. The holder of a judgement can register a JM on the property on foot of that interest. Theoretically the JM holder could then apply through the Courts for a well charging order and order for sale on that property. Practically this is not going to happen. It is an expensive and protracted process and the Courts would be unlikely to support an order for sale in the circumstances described.


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## Steve Thatcher (28 Mar 2012)

44brendan said:


> Yes I agree, but with reservations. You have an interest in your family home, whether or not your name is on the title deeds. The holder of a judgement can register a JM on the property on foot of that interest. Theoretically the JM holder could then apply through the Courts for a well charging order and order for sale on that property. Practically this is not going to happen. It is an expensive and protracted process and the Courts would be unlikely to support an order for sale in the circumstances described.


 
Essentially then the JM sits there until the property is sold some time whenever? Is that right.

Steve


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## sunhill (17 Apr 2012)

Any chance of a reply Brendan ?


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## sunhill (2 May 2012)

Thanks Steve and Brendan44.

I t is nice that you clarified steve that you were legally qualified when we got into the nitty gritty of this thread, which is while the courts may put a judgement on your PPR ordering the sale of the property is very rare if it has happened at all. MF1 was commenting but wouldnt give his background and seems to be a regular poster but didnt have the finite detail in his replies to this thread which can be more dangerous than useful when giving advise or opinion.

sunhill


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## Bronte (3 May 2012)

Sunhill if you default on one or all of the investment properties then the bank involved will force you to sell that investment and you will still be liable for the shortfall.  They will then do either one of the following.

1. Judgement mortgage, they will go to court and put a judgement mortgage on your home.  After that they may or may not force it to be sold to get your share of it.  The forced sale is called a well charging order and is very rare.  Your wife, if she is co-owner will be entitled to her share.  

2. Instalment order, this is a court order for you to pay them back a certain amount over time.  

You need to focus on what you can do to sort out the situation, before the situation itself forces you.  If there is no hope then you must do the sums and then decide what to do.  Be that selling the family home and renting or going to the UK or whatever.  You can also hope that the new insolvency legislation has a solution for you.  That we do not know yet.


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## Luternau (3 May 2012)

sunhill said:


> Thanks Steve and Brendan44.
> 
> I t is nice that you clarified steve that you were legally qualified when we got into the nitty gritty of this thread, which is while the courts may put a judgement on your PPR ordering the sale of the property is very rare if it has happened at all. MF1 was commenting but wouldnt give his background and seems to be a regular poster but didnt have the finite detail in his replies to this thread which can be more dangerous than useful when giving advise or opinion.
> 
> sunhill



Rather than analyse or question the bone fides of people kind enough to offer advice, perhaps it is time to seek professional advice that you can rely on?

AAM, while a tremendous source of information, is not a replacement for such advice. You now need professional advice on what to do next and importantly, as to whether the key question you ask -whether you can protect or put beyond reach of your creditors, your interest in the family home, or other assets you may have.

If you are following the high profile cases before the courts, you will be aware that this is a complex matter and by no means plain sailing and the timing of any such action you may undertake is just as important as the action itself.


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## barryl (3 May 2012)

im also in a tight place with investment properties and neaitive equity,as im sure are thousands and thousands of middle Ireland.I imagine most are awaiting the new personal insolvency agreement.maybe there might be something in it for struggling landlords.i think your case is completely unsustainable and something will have to be sorted out with the debt you owe to the banks.The banks were completely stupid and irresponsible to lend so much money to you.Its my view that they are just as responsible and culpable as you are.Harsh medicine is on the way for the foolish investment bankers,Harsh medicine indeed.


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## Time (3 May 2012)

They cannot force a sale just because they might have an instalment order.


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## Khublei (6 May 2012)

barryl said:


> i think your case is completely unsustainable and something will have to be sorted out with the debt you owe to the banks.The banks were completely stupid and irresponsible to lend so much money to you.Its my view that they are just as responsible and culpable as you are.Harsh medicine is on the way for the foolish investment bankers,Harsh medicine indeed.




And if the properties trebled in value would you be suggesting we split the rewards with the bank too? Time for this country to grow up and stop blaming banks/politicians/whoeverwecan


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## barryl (29 May 2012)

Khublei said:


> And if the properties trebled in value would you be suggesting we split the rewards with the bank too? Time for this country to grow up and stop blaming banks/politicians/whoeverwecan



the bankers were foolish and greedy,they deserve what they get.foolish,foolish,foolish bankers.


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## hastalavista (29 May 2012)

barryl said:


> the bankers were foolish and greedy,they deserve what they get.foolish,foolish,foolish bankers.



The last time I looked they had got 50 bn from the Irish taxpayer, with another 15 to 30 bn to come.

In addition, other than job losses where is the mechanism for the 





> they deserve what they get


 ?

For banks to lend they need to borrow from shareholders/depositors/bond market

The losers in Ireland are the shareholders and the Irish taxpayer. The G/tee took care of the depositors and bond holders.

The Irish taxpayer will be paying for this through 2030


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