Paying off charging order/restriction & transfer of equity

[exa3z]

Hi,

The scenario.

Property - last valuation £118,000, (circa 2006). Jointly owned.
Mortgage - interest-only. Balance, -£109,000. Joint mortgage.
Debt - -£18,000 - CCJ, there is a restriction registered on the land registry. This is registered on my half of the property only.

I am planning to buy the other half of the property from the joint owner, i believe this is referred to as a transfer of equity. I will be staying in the property. There is £18,000 of debt secured on my half of the property which will need to be paid off and the land registry restriction lifted before I can continue. I am now in a whereby I can do this.

What is the best way of dealing with this? I hired a conveyancing solicitor about 3 years ago to carry out the transfer of equity. I did not tell them about the restriction hoping that they understood the rules that the creditor is to be notified of the sale and it would not prevent the transfer of equity going though. However the solicitor got in touch with me saying they had found this restriction and the debt would need to be paid off and the restriction lifted before I could continue.

However I am now in a position whereby I can sort this out, however I am unsure as to how to go about dealing with it. Should I just let a conveyancing solicitor deal with the whole lot as a single entity, or should I first ask for a settlement figure from the creditor and have the restriction lifted at the land registry before continuing with the transfer of equity?

Also, is the creditor likely to accept a full and final settlement offer? I understand that they do not have a charging order on the property, only a restriction, and I understand the differences. (They were not able to obtain a charging order due to the property being jointly held).

If i explain to the creditor that I am planning on buying the other party's half of the property, but in order to do so I need this restriction lifted, are they likely to accept a F&F offer?

Any help as to how to move this forwards would be greatly appreciated.

Thanks.

[MIKE770]

whilst the other half is on the mortgage then it is a restricted charging order and not worth much to any solicitor who knows their job, as the other person (innocent) cannot be penalised for the partner. Peridot

[exa3z]

whilst the other half is on the mortgage then it is a restricted charging order and not worth much to any solicitor who knows their job, as the other person (innocent) cannot be penalised for the partner. Peridot

So are you saying now is a good time to make a settlement offer and get rid of it, before I take ownership of the property in my sole name? Should I just ask for a settlement quote, or should i make an offer, and how much of an offer would they likely accept seeing as the debt is almost approaching 10 years old now!!

Thanks.

[Guest]

Very interesting, as I am in the same position. Awaiting outcome with interest.

[exa3z]

Very interesting, as I am in the same position. Awaiting outcome with interest.

I'll make sure to update my progress on this post then. It's always interesting to understand what approach others have taken and what's been successful for them.

[MIKE770]

await Peridot to pop in and comment? seems you may have missed my point of interest regarding a safety net for you whilst a joint account?

[Guest]

I'll make sure to update my progress on this post then. It's always interesting to understand what approach others have taken and what's been successful for them.

Many many thanks.Life is a learning curve.

[Peridot]

Hi all,
Sorry for delay. In my opinion you need to see how much is owed now. The restriction won't be lifted until the sum is paid is the usual course of things.
If you are also indicating that you are buying the other co-owner's share I suspect they won't have much sympathy if you don't clear the debt with them too.
Have you had confirmation from the mortgage lender that they will agree to the mortgage being transferred into your sole name?
The debt is almost a separate issue as far as getting it negotiated to a settlement is concerned. In any event even though the debt is yours without the restriction being removed and the mortgage lender's agreement to transferring to a sole person you can't really move forward. The restriction won't be removed by the creditor until it is dealt with I would suspect.
Sorry may not be as positive a response as you wanted.

[exa3z]

Hi all,
Sorry for delay. In my opinion you need to see how much is owed now. The restriction won't be lifted until the sum is paid is the usual course of things.
If you are also indicating that you are buying the other co-owner's share I suspect they won't have much sympathy if you don't clear the debt with them too.
Have you had confirmation from the mortgage lender that they will agree to the mortgage being transferred into your sole name?
The debt is almost a separate issue as far as getting it negotiated to a settlement is concerned. In any event even though the debt is yours without the restriction being removed and the mortgage lender's agreement to transferring to a sole person you can't really move forward. The restriction won't be removed by the creditor until it is dealt with I would suspect.
Sorry may not be as positive a response as you wanted.

Hi @Peridot,

Many thanks for taking the time to read my post and for your reply.

I believe I may have not provided enough information to begin with, so apologies, I will hopefully clear this up now.

In my opinion you need to see how much is owed now.

The current owned balance is £18,000.

The restriction won't be lifted until the sum is paid is the usual course of things.

Which is, paid off in full?

If you are also indicating that you are buying the other co-owner's share I suspect they won't have much sympathy if you don't clear the debt with them too.

Fair point, however If i deal with the debt first as a separate entity, they don't need to know that i am also planning on buying the other half of the property right?

Have you had confirmation from the mortgage lender that they will agree to the mortgage being transferred into your sole name?

Yes and No.
I spoke to my lender about this issue 3 years ago. They claim that there is no such thing as "transferring" a mortgage into a sole name. One mortgage has to be paid off and another started, effectively a remortgage. So "we" sell the house, and "I" purchase it back in my own name. As you state, yes i would need confirmation from the/a mortgage lender that they would lend me the money to purchase the property, but this is no different to me purchasing another property. Yes I have had an agreement in principle in the past, but it expired as the whole lot fell through due to the restriction being found. So I see no problems getting another offer in principle again. I think a "transfer" of ownership is only possible when no mortgage is involved, and is more of a land registry thing. However any further information on this scenario would be greatly appreciated!

The debt is almost a separate issue as far as getting it negotiated to a settlement is concerned.

This was mainly my question. Is is advised to deal with this debt first as a single entity, i.e. pay it off and have the restriction lifted off the title deeds. Is the creditor likely to accept a F&F on £18,000 if i state I may be able to raise some money to have it paid off? (yes this is todays balance and also bear in mind that this debt is nearly 10 years old, and I have been making a token payment of £50 a month towards it for this time).

In any event even though the debt is yours without the restriction being removed and the mortgage lender's agreement to transferring to a sole person you can't really move forward.

Agreed, hence this post. I am now in a position where I can raise funds to have this debt paid off and to buy the joint owners half of the property. However what I am looking for is advice on how best to go about this. Sort the debt first, or sort everything as a whole.

To put things into perspective, the property is worth £118,000. The mortgage balance is £109,000. This means there is £9000 equity in the property. This means I would need to raise £4500 to buy the second share of the property. However, the £18,000 debt secured against the property (on my half) means that effectively it is in negative equity, so without a cash injection from somewhere I have been unable to do anything about this situation at all for a very long time.

Look forward to your reply,
Many thanks.

[Peridot]

Hi again,
Any transfer/sale and associated mortgage is going to require the restriction removed first.

They don't need to know what your next plan is but looking at the figures there wouldn't be sufficient to clear both the mortgage and the debt in any event.

If there is insufficient funds to change mortgage or remortgage and clear the debt you may have difficulties. I would settle the debt first and have the restriction removed. The creditors have to complete a form that goes to the HM Land Registry to have the restriction removed. They often need a bit of a chase to make sure it is done, once the debt is paid off.

It is always worth talking to the creditor pointing out you will continue at £50 pm (they don't need to know your plans) or that you can make a full and final payment of £x.xx

Hope that helps?

[exa3z]

Any transfer/sale and associated mortgage is going to require the restriction removed first.

Absolutely, I am totally aware of this, hence this post.

They don't need to know what your next plan is but looking at the figures there wouldn't be sufficient to clear both the mortgage and the debt in any event.

I think I did state that i am now "in a position to sort this out" i.e. I have the cash to sort out the shortfall.

If there is insufficient funds to change mortgage or remortgage and clear the debt you may have difficulties. I would settle the debt first and have the restriction removed. The creditors have to complete a form that goes to the HM Land Registry to have the restriction removed. They often need a bit of a chase to make sure it is done, once the debt is paid off.

Ok, thanks for the heads up.

It is always worth talking to the creditor pointing out you will continue at £50 pm (they don't need to know your plans) or that you can make a full and final payment of £x.xx

I will make sure to state this in my full and final letter to them.

Hope that helps?

Absolutely! Would you mind casting a quick eye over my full and final letter to the creditor if I post it here or PM it to you when I've drafted it. It would be most helpful.

And I will make sure to update my progress on this thread as I go.

Many thanks,

[exa3z]

Further to this, I would be grateful if your could advise me on my draft below @Peridot.

Dear Sirs

Your client: xxxxx
Account number: xxxxx
Your ref: xxxxx

I write with reference to the outstanding balance on the above account and would like to make an offer to resolve the matter.

I am able to raise the sum of xxxxx and I wish to offer this amount as an ex-gratia payment in full and final settlement of the account. This offer is made on the clear understanding that, if accepted, neither you, nor any associate company will take any other action to enforce or pursue this debt in any way whatsoever and that I will be released from any liability, with no reference or future ability to quote or use Penny v Cole [Pinnel 1602] in trying to recoup any written off balance.

I also request that, if accepted, you will notify the Land Registry that the balance on the account has been paid in full and that the restriction on xxxxx should be removed. You will also make an entry on my credit reference agency file relating to the above account as having been fully satisfied and the current balance and default balance will be set to £0.00 on all credit reference agencies where my account has been recorded.

May I draw to your attention that there is modest equity in the property, and the property is mortgaged on an interest only basis. Therefore the capital owed has been and will be constant for the foreseeable future. The restriction placed upon the title deeds brings the property into significant negative equity, therefore I believe it is in your best interest to consider this offer.

Payment can be made within 14 days of receiving your written agreement of this offer. I am using these funds to pay this account as a priority over other creditors, however if it's not acceptable, my offer will be withdrawn and the funds will no longer be available to settle this account.

I look forward to your response within 14 days.

Yours faithfully,

Xxxxx

The debt is that old that is no longer appears on my credit file, therefore is it advised to include the below, seeing as it is no longer on there? Im concerned that maybe it will affect my credit rating?

You will also make an entry on my credit reference agency file relating to the above account as having been fully satisfied and the current balance and default balance will be set to £0.00 on all credit reference agencies where my account has been recorded.

Many thanks,

[Guest]

I have been following this with interest, as stated I have a similar situation, with advice given, I now see a way forward in my case.

[exa3z]

Further to this, I would be grateful if your could advise me on my draft below @Peridot.



The debt is that old that is no longer appears on my credit file, therefore is it advised to include the below, seeing as it is no longer on there? Im concerned that maybe it will affect my credit rating?



Many thanks,

Anyone please?

[Peridot]

Hi,
apologies for the delay. I have asked Amethyst to take a look at the letter. She's the guru on the debt bits and pieces. She should be along soon.