Omitting Parts Of A Contract. Is It Now Null and Void?

Hi, myself and my spouse are looking for some contractual law advice please.

We took out a mortgage in 2001 for an investment property in Dublin. We were not asked for any guarantees.

Roll on 2011 and our financial situation has changed for the worst. We contacted the bank and a couple of weeks later they called us in and issued a contract they wanted us to sign.

The contract stated that we should try and sell the family home. We did not think this was a wise idea and removed it from the contract while agreeing to everything else the bank wanted.

Is the contract now null and void because we didn't agree to all its terms?

Did the bank sign before you signed or afterwards? Did they acknowledge the change you made?

Did you take legal advice on signing the new contract?

Be careful of any advice you get here unless it's from a solicitor.

What was in the contract and why did you need to sign a new one?

For a contract to be valid, there must be "consideration". Both parties must agree to do something or to pay something.

My understanding is that deleting a clause from a contract does not make it null and void.

Brendan

Just to clarify.

Did you sign the contract ?
Did you take it home and review it, or sign it in the bank on the day ?
How did you remove the parts that you say that you removed ?

Did you get legal advice before removing the parts, or signing it ?
If not, how do you know exactly what you have signed up to ?

In response to all questions.

Millieforbes, The bank had already signed before we signed the contract. Yes they acknowledged that we had omitted a section of the contract and asked us to provide a wriiten statement on why we had made these changes. We issued them with their requirements and have heard nothing since.

Brendan, Yes we took legal advice. We were told that the condition was harsh and not very relevant to the over all problem as our family home would not sell at this time. The main body of the contract was acknowledging our financial difficulty. This was all fine until we got to the part were they wanted us to sign over our life policy, our house insurance policy, sell our home. We agreed to them taking our policys but omitted the part were they asked us to sell our house.

Huskerdu, Yes we both signed the contract and took it home to sign. We basically removed the parts by drawing a line through it. We initially got legal advice and were told to renegotiate the contract to a more favourable position but the bank wouldn't hear of it. We did not have the money to have the solicitor negotiate on our part but we did take his initial advice and omitted a section.

We are very concerned by their lack of response.

Ireland.1....When you say your house insurance policy...do you mean the one on your family home or the investment property. If it's the family home....I'm not sure they can do that.

Hi Ann, Apologies I didn't make that very clear. They wanted us to sign over the house insurance policy on the investment property. We have agreed to this. We also signed over our life policies. We had no problem with this either. We have signed over everything apart from our family home.

What you are basically saying is that you bought an investment property with a bank loan where no guarantee was written into the contract for the investment loan by the bank.
Now the bank have asked that you allow them re-negotiate the terms of the contract of that loan. You very kindly obliged but refused the clause where they were insisting you sell your family home.
Once you have copies of the new contract and a copy of the qualifying statement you made regarding your deletion of the clause/clauses you have conformed to all of the banks requests. I see no reason why you should worry. You have done well Ireland.1 to refuse to sell your family home.

My understanding of this
0: OP initiates discussion with bank as OP sees a problem re repaying loan on IP
1: the initial 'contract' was signed by bank.
2: OP draw a line through some clauses and sign.
3: bank acknowledged that OP had omitted a section
4: Bank asks OP to explain why they did this.
5: OP does this and hears no more.

IMO the bank has not accepted the deletion of the clauses.

Drawing a line on a piece of paper already signed by one party is not sufficient.

For this to work, at a minimum, the OP and the bank both needed to initial the changes in the paperwork.

Is the family home debt free?

Why was selling the IP not mentioned?

Was there a time scale put on the sale of PPR?

Was there a time sale for next review?

In terms of not hearing back I would not be concerned: the banks are snowed with problem loans and your case has been reviewed by the bank, the paperwork done and the review box ticked: next problem loan please.

When the regulator calls the Bank to account they can say we have reviewed X accounts etc etc

To follow up on a point made by Brendan

There are 3 parts to a contract, offer, acceptance and consideration.

What is the consideration here from the bank, not to foreclose?

Is there a new repayment schedule agreed?

There is something missing here.

That is exactly the situation.

No the family home is not debt free. It is on a mortgage and also in negative equity.

Selling the IP property was mentioned but it is also in the red.

There was no timescale put on the PPR.

There was no time scale for next review either.

It all seems to be very much in limbo.

Also I'd like to add that we are paying interest on the IP.

Whether it is in the contract or not, your home and your investment property are integrally linked.

If you sell the IP for less than the mortgage, you will still owe the bank the shortfall. They can get a judgment for this and then register it against your home.

However, as both properties are in negative equity, I don't really see the point in this.

Brendan

Ireland.1......Only you and your partner can agree to sell your family home to cover debts on an unsecured investment property.
Even if you are in severe arrears on the mortgage on your family home...the bank cannot make you sell your family home to cover the debts owing on an investment property with an unsecured loan.
The bank will do everything they can to get the best deal for themselves. If you can keep your mortgage on your family home paid...they cannot touch it.

There was no initial meeting of minds on the original contract if the bank signed and then the OP deleted and signed - so no contract was formed at this time.
The bank then appears to have been made aware of the changes to the contract and (arguably) has proceeded on the basis of the changed contract. (i.e. they have acted as if a contract is in existence and the only contract that that could be is the altered contract).

Thus (following the same argument) the contract was formed at this time - without the deleted clause.

OP needs proper legal advice.

@hastalavista - no new consideration is needed in the scenario I outline above.