Key Post Ex has disappeared/refuses to pay mortgage

[Brendan Burgess]

Summary of the legal position
I am not a solicitor. This is my understanding of the position. I am open to correction. Take legal advice from a solicitor before taking any action based on this post.

For simplicity, we will assume that they are not married and have no children, so the only issue to be tidied up is their jointly owned home.

They are jointly and severally liable for the entire mortgage. If John stops paying, Mary is obliged to pay his share and her share. This really is fundamental to understanding the problem of joint mortgages.

If John just stops paying the mortgage, he remains a joint owner of the house. If Mary continues to pay the mortgage in full, John can come back at a later stage and claim half the house. Or he can just move back into the house.

If Mary wants to sell the house, he won't be able to do so without John's consent.

If Mary gets into difficulty, she will have problems rescheduling the mortgage without John's agredment.

 

[Brendan Burgess]

What if John moves out and point blank refuses to contribute to the mortgage, or even discuss it?

Option 1 - Continue paying the mortgage in full

• John can move back in anytime
• Mary is gradually paying down the negative equity - including his share
• He can claim half the house when it returns to equity through your capital repayments and house price increases

Option 2 - Just pay interest only for the foreseeable future

Mary should ask the bank to put her on interest-only. If they refuse, she may have to unilaterally go on interest-only.

But at least, she is not paying down John's share of the negative equity.

As her mortgage will be in arrears, the bank will start pursuing John as well which is a good thing.


Option 3 - Ask the lender to repossess it

Mary could tell the lender that she cannot afford to keep the mortgage on her own. She will agree to them repossessing and selling it. If he can't be contacted, they should get a repossession order easily enough.

The downside is that she will be liable for the entire shortfall and not just her half. If John has disappeared, they will come after her for it all. Mary may have to consider bankruptcy.

Option 4 - Rent out the house in full

Mary would be putting in a lot of work renting the house and he can still come back and claim his share after 10 years if prices have picked up.

See this detailed Case Study Ex refusing to pay anything

 

[Brendan Burgess]

If they are married, Mary could also apply for separation or a divorce. The judge may make an order giving Mary the full ownership of the house. However that does not remove John from the loan. But that should not concern Mary.

Brendan

 

[Brendan Burgess]

Just how unfair is this?

I wrote the above back in 2012, when most of these cases were in deep negative equity and Mary was struggling to meet the full repayments.

But it might not be as unfair as it appeared at first sight.

Here was the situation back in 2012:

The repayments are about €1,200 per month, if the mortgage is at 4%. It would cost Mary €1,200 a month anyway to rent a house.

Here is the situation today:

So although he can still move back in at any time, at least she has not lost out.

If it was a 1% tracker mortgage, the repayments are €900 a month, a lot less than she would be paying to rent a similar house.

And, she has paid off more of the capital, so she is in positive equity.

Brendan

 

[Seagull]

There does need to be a simplified way of getting a non-paying joint mortgage holder removed from the deeds. In a few years time, John can still arrive back on the scene and demand to move in. Then he can proceed to make life difficult insisting the house be sold, and walk away with half the profit, despite having not contributed anything in all that time. If anything happens to Mary, John is still on the deeds, and entitled to half the value of the house.