Shortfall on voluntary sale on investment property, but mortgage free home - BoI

can anyone tell me if i do a voluntary sale with one of my properties and have a shortfall but have another property how long does it take the bank to put a charge/judgement on this property for the shortfall and what would this mean to us, we have very little money coming in, i know we will have to pay the bank an agreed weekly/monthly amount but would like to know how long all this takes

The 1st thing you need to know is that the bank cannot put a charge on your property without your consent / agreement however.......

If, when the house is sold there is a shortfall (as you are now anticipating) and if you decide not to cooperate with the bank placing a charge against your home, the bank may decide to take a court action against you for the shortfall. If they are successful in this court action they will receive a judgment against you. A court judgment can be enforced in a number of different ways and the most common ones are as follows :

1) They can apply for an installment order. They can ask the court to order you to pay a certain amount of your income each week/month. The court wont make the order if your income isn't strong enough.
2) They can apply to have the judgment set against your home, known as a judgment mortgage. If this happens you will have a judgment mortgage against your home and when the house is eventually sold one day in the future, the bank will be paid in priority.
3) They can apply to the court to have your home sold to repay the debt. Its very unlikely that it will take this action and very unlikely that such an action will be successful in your case.
4) They can appoint the city / county sheriff to seize some goods. The sheriff is normally only interested in large ticket items such as cars, boats , caravans etc etc.

In terms of a time scale, it will take months and possibly more than a year for the bank to obtain a judgment and even longer before that judgment can be registered as a judgment mortgage against your home.

It would be worth talking to a Solicitor who will advise you properly.

Dr Debt
thank you for that information i have looked and looked at several posting but was getting nowhere, we are both 60 year old and living on social welfare and do not have a lot of spare money, we are anticipating that when we sell the property we will have a shortfall of about 45,000 depending on what price we sell the house for, we have had to drop it to nearly half its value to get any interest and we now have someone who is interested, we have been so worried that if we cannot come to some arrangement with the bank to pay the shortfall they would put a charge on our family home and make us sell it leaving us homeless, at least if it takes months or even years for this to happen, we will have some breathing space

My advice to you is not to agree any repayment schedule with the bank regarding the shortfall if you cannot afford it. You just inform the bank that you don't have the means and let them decide what to do.

The most likely action by the bank will be to get a court judgment on the shortfall and for it to register that judgment as a mortgage against your home. In most cases that will be the end of it. The judgment mortgage will cease to have affect after 12 years. If the house is sold within that 12 years the bank will get its money back.

If you decide to cooperate with the bank in having a charge placed against your home voluntarily, make sure you get good financial / legal advice on that. One important factor is that a judgment mortgage ceases to have affect after 12 years. A legal charge entered into voluntarily is likely to remain with the property until sold. No prizes for guessing which one the bank prefers.

Deleted

so are your saying that if we dont agree with the charge and cant afford to pay the bank anything and they go for a court judgement on the shortfall and it is registered as a judgment mortgage it only last for 12 years so what happens to the debt of 45,000 say after this time does the debt die,

Yes, "it dies" after 12 years.

thank you for your help and information will keep you informed if we get a sale

Dr Debt
We have got a buyer for our property as discussed in previous thread, we owe the bank 165,000 and have sold it for 123.500 after costs leaving us with a shortfall of about 45,000, the bank have appointed an estate agent in Dublin to deal with our estate agent/auctioneer, which we were very suprised they did, why couldnt our estate agent do it all himself, what we would like to know if you could help us with is, does the sale go through and then the bank informs us what we owe them in the shortfall, or do they ask to put a charge on our other property before the sale can go ahead, you
said not to agree any payment plan or agree to put a charge on our property (family home) do all banks do it the same way. We are just worried that if they ask to put a charge on our house before the sale is finalised we could loose the sale

I think it is better that they employee the estate agent, because then the cost of the estate agent is on them and not you - which they will probably deduct from the sale of the property.

I assume the bank has appointed its own estate agent to ensure that the sale of the property is being conducted at true market value. In other words the bank has appointed its own estate agent to check up on your estate agent. I wouldn't worry too much about that.

It may happen that the bank will insist on putting a charge on your home before cooperating with the sale of the 2nd property and you may have to do battle on this.If this happens you will need to get your Solicitor involved. Under Section 94 of the 2009 Land reform and conveyancing act, you can apply to the courts to make a direction to sell the property if the bank is unwilling to let this happen.

Dr Debt
i suppose we will have to wait and see what the bank decide to do we just dont want to hold up the sale in case the people pull out, we just want it over and done with and get on with our lives, we have lost a lot of money on this property and even when its sold we still owe the bank 45,000 here's hoping that they let the sale go ahead and then come after us for the money, we could also leave the country (only joking) and hope they dont find us.
Its very unfair that people like us loose out and the banks always seem to get their money, whatever happens.

Golden1951 said:

Its very unfair that people like us loose out and the banks always seem to get their money, whatever happens.

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Why is it unfair that the bank should get what you owe them?

There may be other ways around this.
Is there debt on your home?
Can you provide a lump sum to the bank for a portion of the debt?
Who is the bank?

I know banks would prefer to get a portion of the shortfall in one lump sum now, rather than putting a judgment against your property.
Also, can the bank not renew the judgment in 12 years time? I have heard conflicting stories about judgments!

commercial
No there is no debt on our home its mortgage free, we dont have any money to give the bank a lump sum, we borrowed money on our first house to build the one we lived in now, this was in 2006 planning to sell the first house to pay off the mortgage, but as we all know the property market crashed and we ended with two properties and not being able to sell, we wish that we hdnt built again, there are loads of people in the same position as us because of the crash. the bank is the BOI

Dub Nerd
we are not disputing that we owe them money and yes we will pay it back, but why should they put charges on a property that really has nothing to do with them, we have worked hard all our lives and always paid our way, but because of what happened when the property market crashed (mostly due to the banks) we find our selves in this position, have you no compassion for people who find themselves in this sort of situation it seems from the sound of it you havnt

Yes I do have compassion. I think it's unfortunate. But obviously you do owe them the money and they are perfectly entitled to pursue your assets to get it back. I agree the banks played a part in the property crash, but so did the general public by buying into it. We're all paying for the banks, not just those who are in debt to them, so a loss for the bank is a loss for the rest of us. It seems to me a reasonable compromise that the bank can place a charge on your property, but is unlikely to move to repossess it. I hope things work out for you.

Dr Debt
we have got a buyer for our property and we are selling at 122,000 leaving a shortfall of about 46,000, the bank is the BOI, i have spoken to the lady dealing with our case and i can say she is not helpfull at all we have been waiting 6 weeks to hear from them after receiving the offer only to find that we should contacted her (nobody told us this) i finally spoke to her and gave her the information she required ie solicitors fees, auctioneer fees, and she told me she would now be able to put forward a proposal to us, i asked her what she meant by this and she said we would know when we received it, i pressume it will be asking us what we are going to do about paying the shortfall back to them, we do not want a charge putting on our property we live in and we will try to do everything we can to prevent this, we are prepared to make an offer of payment, but we are both on social welfare of 188 euro each so we do no envisage that we will be able to pay much, you said in a previous thread to me that we can refuse to have a charge put on the house, how would we go about this and could they stop the sale of the house if we do not agree.

Golden1951 said:

we borrowed money on our first house to build the one we lived in now,

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Do I understand you correctly?

You borrowed money to build the house you currently live in?

But you don't want to pay it back?

You don't want the bank to put a judgement on your current house?

If this is what you are saying, it makes no sense. If that is not what you are saying, I apologise for misunderstanding you.

I think it's better that you become reasonable on all of this. You need to accept that you borrowed money to build your home.

You owe the bank €46,000

You can't afford to repay capital on this, but you can afford to pay the interest on it, which would be around €172 a month. This is what you should do.

If you refuse that, the bank could and should
1) Get a judgement for the debt
2) Register it against your home
3) Seek repossession of your home.

Brendan

Yes we did borrow money on our first house to build this one, and yes we do not dispute the fact that we owe the shortfall to the bank and we will try to make an agreement to pay what we can on this debt, we are both over 60 and neither of us is in good health which has happened over the last few years and that is why we have got into this situation of having to do a voluntary sale on our property, we are not going to refuse to pay money to the bank but we do not want a charge putting on or property as it is all we have left, when we built our properties we were both in good jobs and hoping that when we eventually came to sell we would have money for our retirement this is now not going to be the case, when we were working we never missed a payment on our mortgage, but it just seems now the bank dosnt seem to care, and are doing nothing to help us