Can a Receiver just sit on a house for three years without collecting rent?

sexitoni

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Hi,

So this is the net result of this old thread:


And if you'll indulge me, I'll pick up the story again, because I have a new question based on subsequent events.

I wrote the original post in 2013. My father in law died at the end of 2014 and my mother in law died in May of this year. I am in a position to correct some of what was written above with actual figures, as I have now been through the original paperwork. Again, the fact that my late father-in-law made some pretty terrible decisions here is not in dispute! Nor is the fact that there's a debt to be paid.

What happened / what happened next:
1. My Brother-In-Law (BIL) was denied a mortgage for a house in 2005 in West Cork. He approached my father-in-law (FIL) for help.
2. Two new mortgages were taken out December 2005 by my FIL to buy the house the son wanted: €280,000 for the 'son's house', €100,000 against the 'father's house'. €355K was spent purchasing the 'son's house' and €25K was spent closing all FIL's existing borrowings.
3. Both mortgages were 15 years, interest only to the end of 2008.
4. BIL's agreement with his father was that he was to pay both mortgage repayments as rent, while having three years to build savings and arrange a mortgage for the balance. He received rent tax relief.
5. FIL covered mortgage protection on the €100K, and paid the home insurance and LPT on the 'son's house'. There was no mortgage protection on the €280K.
7. It became obvious by 2008 that the son was not going to get a mortgage - the crash, and his wife losing her job. The interest-only was extended and extended again to the end of 2012. By the end of 2012 there were eight years left on the two mortgages and the principals kicked in. Total repayment was >€4,000 per month.
8. BIL couldn't hope to pay it (he had messed around with the existing arrangement as it was, so that the accounts were often in temporary arrears). The mortgages quickly went into arrears, hence my original post about negotiating a restructure...
9. FIL died November 2014. The MP kicked in on the €100K loan and that was cleared and closed. This should have been enough to help the BIL, but whatever went on at his end, he still couldn't buy the house.
10. At some point, I can't work out exactly when, my BIL stopped making 'rent' payments altogether. Relationships almost totally broke down.
11. My mother-in-law (MIL) wanted no part of any of it. She told her son, my BIL, that when a receiver was appointed she'd cooperated fully to get the debt off her back. A receiver was eventually appointed in Summer 2017 (Deloitte) and my mother-in-law (MIL) did whatever she had to do to facilitate that. The debt on the 'son's house' was just under €280K at this point. We then heard nothing more...

The question
My mother-in-law died in May of this year. She left her home to my wife and her sister, plus about €50,000 cash - before legal fees, funeral expenses etc. It's all currently in probate.

The solicitor dealing with the will has discovered that Deloitte have never made any move to sell the house in the last three years, and that no rent has ever been collected from my BIL. Apparently, they attempted to evict my BIL in 2018, but he successfully fought it at the RTB on the grounds that 'the landlord' (his mother) had not given adequate notice. He is still in the house today. Meanwhile, the original Ulster Bank mortgage is now owned by Promontoria. They have continued to apply interest and charges to the original debt, so that it is now ~320K according to the last statement I saw.

So, after all that: Can a receiver just sit on an investment property like that for three years, not sell it, not collect any rent, while the lender continues to pile interest onto the debt? Can they keep doing that as long as they want?
 
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sexitoni

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I knew I'd forget something... We were told by an estate agent in 2015 during FIL's probate that the house should fetch €290K - €300K, so if it had been sold by the receiver in 2017, it should have come pretty close to covering the debt as it stood then. Now the fear is that it will be sold for a fair whack less, with the debt having since risen about €40K.
 

Clamball

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Oh gosh what a mess. So will all of your MIL estate go to paying off the debt to Promontoria? I cannot see how this will be avoided. How awful that your in-laws could not enjoy a long happy retirement.
 
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sexitoni

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Well I assume the house my BIL is in would have to be sold first. Then the estate would be liable for the balance. Hence the question - can a receiver sit on it for three years, and collect no rent, while Promontoria pile on the interest?
 

llgon

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Very sad story for all involved, particularly tragic for your parents in law.

2. Two new mortgages were taken out December 2005 by my FIL to buy the house the son wanted: €280,000 for the 'son's house', €100,000 against the 'father's house'. €355K was spent purchasing the 'son's house' and €25K was spent closing all FIL's existing borrowings.
Presumably your mother in law also purchased the 'son's house' and her name is on the mortgage. If not it's hard to see how her estate would be liable for it.

Coming to your question I don't think it's a fair one. The receiver doesn't seem to have just sat on the property for three years:

Apparently, they attempted to evict my BIL in 2018, but he successfully fought it at the RTB on the grounds that 'the landlord' (his mother) had not given adequate notice.
Other actions may have taken place or be currently underway that you are unaware of. All I can suggest is that your wife ask the solicitor responsible for probate to contact the receiver and put pressure on to expedite matters. She may also be able to find out what exactly the receiver has done over the past three years
 

Thirsty

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When your father in law died in 2014; who did the probate or grant of administration? And what was the outcome?
 

Brendan Burgess

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Your brother in law owes the rent to the Receiver.

But he presumably has declined to pay it and there isn't that much that a Receiver can do about it.

There isn't much incentive on the Receiver. His fees mount up the longer the case goes on.

The estate is good for the shortfall which will be huge after a Receivership sale and Receiver's fees.

I think that your best bet here is to consult another Receivership firm and seek advice on how to approach this.

Brendan
 

sexitoni

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Thank you for the answer Brendan. Just to clarify, are you saying that the receiver can sit on the property as long as they like, the lender can continue to apply interest to the debt and we are powerless to expedite things?

When your father in law died in 2014; who did the probate or grant of administration? And what was the outcome?
The same solicitor. Everything was left to MIL, so she became the owner of the house in question. It was in arrears by then but a receiver had not yet been appointed. I believe the original loans were in both my FIL's and MIL's names as she was in employment at the time.
 

Brendan Burgess

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are you saying that the receiver can sit on the property as long as they like, the lender can continue to apply interest to the debt and we are powerless to expedite things?
Hi Toni

I am not an expert which is why I suggested contacting another Receiver for advice.

I doubt that the Receiver wants to sit on it but the system makes it very difficult to remove a tenant who is not paying.

And it would be very difficult to sell it with a tenant in place.

Is there any chance that you could clear the mortgage and then the Receiver would be withdrawn.

Then the Executor would have to deal with the tenant directly.

Brendan
 

sexitoni

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Understood. The debt currently stands in excess of €310,000. We aren't in any position to clear it, nor could we hope to afford a delinquent tenant while going through an eviction process. We need the house to be sold, despite the fact it will be sold at a discount. However we are considering fighting the imposition of additional debt during the receivership process.
 
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