If a lender allows you to sell a house in negative equity...

Brendan Burgess

Brendan Burgess

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they ask you to sign an agreement to pay the shortfall, as outlined by JayJay in this post.
The bank tried to coerce us into signing an agreement to repay the balance and threatened to call off the sale unless we did. I had to get quite firm with them and say that if they didn't take this they'd end up with nothing. So basically it was sold without us making any agreement to repay the balance.
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JayJay did not sign it, but they allowed the sale to go through anyway.

What is the significance of this agreement?

Whether the borrower signs it or not, they are still liable for the money?

Is it just a written acknowledgment of their debt so that they can't later claim that they thought that they no longer owed it?

Or does it have any more serious significance?
 
Brendan, in my case I will be liable for the shortfall, which is extensive. I was asked to sign a document which stated they would have first dips on the investment property which is also in NE but still turning a profit. I refused to sign the document as I wanted to bankrupt myself.

For legal reasons I wont be naming the bank but I felt it was all very cloak and dagger if you know what I mean. I feel there is a lot more significance to signing these documents than meets the eye. They were seriously miffed when I refused to sign and threatened they would remove me from MARP as I was not complying with them.
 
I was asked to sign a document which stated they would have first dips on the investment property which is also in NE but still turning a profit.
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Eh sorry. They are basically saying that should you come into a few bob in the future you should repay your debt.
 
I had a brief chat with a banker and they said that the document clarifies the agreement reached, which is often to repay the outstanding balance over the remaining term of the loan at the mortgage rate. That would seem to be fair enough - in other words, they can't demand it immediately.

Brendan
 
These documents are to basically ground any claim they may bring to court in the future for any shortfall. If the person then goes bankrupt it is completely meaningless.
 
Thanks Time

So if the bank is agreeing to short sell a property but insists on the borrower signing this, they should agree if they want to sell the property?

Brendan
 
elcato said:
Eh sorry. They are basically saying that should you come into a few bob in the future you should repay your debt.
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I was advised by a solicitor not to sign the document.

My intentions were to stay in my home and repay ever last single cent I owed. This was not to be as the bank were not very helpful. They wanted me to sell the investment but it would have been financial suicide if I had as the investment was covering part of the costs of the mortgage.

Not in all cases are the borrowers to blame.
 
'' These documents are to basically ground any claim they may bring to court in the future for any shortfall..''

The debtor and Bank firstly agree a sale and complete an agreement as to how any residual debt will be discharged, that is the function of this form. The Bank will receive the proceeds of sale, that is their security realised, this form acts as an acknowledgment of the debt, without the provision of separate legal advice at the time of signing then I would seriously doubt it would withstand a legal challenge.
 
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