Selling house with neg equity, legal procedure for paying balance outstanding?

[mf1]

Doesn't necessarily rule out a settlement. Call them and tell them you're thinking of buying a boat or even better a small plane and would like access to the funds shortly. They might be in the mood to negotiate then. You're under no obligation to repay the loan early using your capital but you're doing them a big favour by doing so. Especially seeing as you are on a tracker. Move your deposit if necessary.

This is nonsense.

It is really simple. House will sell for (e.g.) 200K. Mortgage is (e.g.) 250K. Vendor/solicitor cannot close sale without the agreement of the lender on payment of the total sum outstanding. Otherwise, vendor's solicitor has a personal liability to the lender. Vendor has the money available to pay the difference. Vendor does not trust his own solicitor.


Solution: close the transaction in the Bank. In one transaction, close sale, hand over deeds, lodge all necessary funds to the mortgage account, walk away.

End of.

mf

 

[jambo.ie]

There'll actually now trying to force me to repay the neg equity BEFORE the sale completes (or buyers funds received), which leaves me in a very precarious position if the buyer pulls out! Am trying to get around doing this in case this happens but they're being extremely difficult about the repayment, let alone trying to negotiate a settlement!

Hmmm. Without LTV covenants in the loan contract I'm not sure how they could be in a position to demand the capital. Unless the loan was secured against this capital you should be free to withdraw as you please. The sale complicates things as per your bargaining position but it sounds like they may be chancing their arm. It would not be the first time and it won't be the last.

Solution: close the transaction in the Bank. In one transaction, close sale, hand over deeds, lodge all necessary funds to the mortgage account, walk away.

The capital is his/hers to do with what he/she pleases. Unless it's subject to terms in the loan contract. Nothing to stop him/her withdrawing it. If it's a tracker and the sale does not go through then the capital would be much better deployed elsewhere.

 

[mf1]

Hmmm. Without LTV covenants in the loan contract I'm not sure how they could be in a position to demand the capital. Unless the loan was secured against this capital you should be free to withdraw as you please. The sale complicates things as per your bargaining position but it sounds like they may be chancing their arm. It would not be the first time and it won't be the last.

The capital is his/hers to do with what he/she pleases. Unless it's subject to terms in the loan contract. Nothing to stop him/her withdrawing it. If it's a tracker and the sale does not go through then the capital would be much better deployed elsewhere.

Have you noted that the house sale is due to close? And that the sale cannot and will not close unless the mortgage is discharged - either in full or at a discount if that can be agreed.

Of course OP can withdraw his capital but the Bank know he has the money and there is no earthly reason for them to agree to the closing , and they won't, unless the mortgage is discharged. The sale proceeds here will not cover the mortgage due.

And who exactly is chancing their arm here? The Bank who are owed the money?

mf

 

[ipad]

Not looking for a reduced settlement or chancing my arm about anything. I just want to make sure that I don't pay off the shortfall from the sale too early, so if the sale falls through I won't have access to the cash. Have asked if I could keep the money in my current account until I am certain the buyer's funds have come through and then transfer the balance then but they are insistent on getting this money before that. My solicitor is trying to work out a solution with them at the mo but they are digging their heels in. Is there any legal/procedural reason why I can't write cheque/pay the money on same day sale proceeds come through?

 

[mf1]

Not looking for a reduced settlement or chancing my arm about anything. I just want to make sure that I don't pay off the shortfall from the sale too early, so if the sale falls through I won't have access to the cash. Have asked if I could keep the money in my current account until I am certain the buyer's funds have come through and then transfer the balance then but they are insistent on getting this money before that. My solicitor is trying to work out a solution with them at the mo but they are digging their heels in. Is there any legal/procedural reason why I can't write cheque/pay the money on same day sale proceeds come through?

Solution: close the transaction in the Bank. In one transaction, close sale, hand over deeds, lodge all necessary funds to the mortgage account, walk away.


mf

 

[ipad]

Do you mean physically walk into my branch with buyer's cheque, my own chequebook to pay balance and get the deeds into my hand from them there and then? Will they do this?

 

[mf1]

Do you mean physically walk into my branch with buyer's cheque, my own chequebook to pay balance and get the deeds into my hand from them there and then? Will they do this?

No. I mean the parties to the transaction do the transaction in the bank. You will not be given the buyers cheque. Your solicitor will be given it and he will not just hand it to you. Your solicitor already has the deeds. He cannot hand over those deeds to your purchasers solicitor until he is in sufficient funds to discharge the whole of the mortgage. You don't trust your own solicitor therefore you need to be beside him during the transaction and you need to pay off the balance of the mortgage at precisely the same moment or earlier as the solicitor is discharging what he can with the proceeds of sale.

You need to get your head around the parts of the transaction. You don't get any money from the sale - you owe money. The only way you can ever close this sale is by grasping that you are not in control - the bank is.

I think you really need to talk to your own solicitor. Or get a solicitor that you do trust.


mf

 

[callybags]

Or get a solicitor that you do trust.


mf

Best piece of advice in this thread so far.

 

[Brendan Burgess]

Do you mean physically walk into my branch with buyer's cheque, my own chequebook to pay balance and get the deeds into my hand from them there and then? Will they do this?

It would be very unlikely that your solicitor would accept a cheque from you which might bounce. I really think you should save yourself a lot of headaches and either reduce the mortgage balance now or else transfer the money now to your solicitor.

Brendan

 

[jambo]

Have you noted that the house sale is due to close? And that the sale cannot and will not close unless the mortgage is discharged - either in full or at a discount if that can be agreed.

The vendor also mentioned that they do not wish to tie up the capital if the sale does not complete, your later suggestion regarding timing of the transactions is much more reasonable.

And who exactly is chancing their arm here? The Bank who are owed the money?

The bank contracted a loan term, it might be in their interests to get the money back early but they have no right to it. If the sale closes then the situation changes and the contract will indeed be terminating earlier than loan term.

 

[TurboTim]

can you not place your savings in a deposit account with your lending institution?

The closing instructions can be that on the closing date your deposit account is used to clear the deficit arising from the shortfall between
the purchase price and the mortgage.

Instead of depositing with your solicitor you are depositing with the bank/Building society that is due to get the money. THey can only take it if the sale completes.

 

[Draigean]

I think you should discuss this matter with a professional financial advisor for his/her advice, rather than seek opinion here.
However, some of the opinions here may get some thoughts going for you or for others.