Bank didn't register charge

[garden123]

I am unable to pay my mortgage but have discovered that the bank has never registered a charge on my house. Other debtors (including my wife) have registered a charge so where does that leave us?

[alfa1_steve]

Hi garden123

 

I would need more information in order to advise.

 

The lender can register a charge at any time so it does not leave you any way

 

Who else has registered a charge and in what order?

 

Ie the lender normally has first charge, secured loan companies second charge etc etc

 

Why has your wife registered a charge is there an ongoing dispute?

[garden123]

Thank you for your reply.

 

I have had the mortgage for 5 years. Due to business difficulties I am unable to pay my mortgage, tax or credit card debts.

 

The house is in my name only. When a creditor registered a charge for a small amount we discovered that the bank that holds the mortgage had never registered a charge. My wife then registered a charge to try to protect her years of financial input into the household. We are not estranged.

 

It is probable that I will end up being made bankrupt so my question is where does the bank come in order of creditors? If they have not registered a charge are they treated the same as other unsecured creditors?

 

If this is the case then it gives me leverage to stop them taking action as quickly as they otherwise would.

 

Also, the house is up for sale and if by some miracle it sells, does their lack of charge mean that the mortgage with them would not be automatically cleared by the solicitor? The registered charges being cleared first and then the balance being paid to me? The bank then having to pursue me for the debt?

[alfa1_steve]

Hi garden123

 

"I have had the mortgage for 5 years. Due to business difficulties I am unable to pay my mortgage, tax or credit card debts."

 

First things first garden have you spoken to someone like the citizens advice as bankruptcy may not be your only option. You could look at debt relief orders iva's etc. I would speak to the cab or another voluntary organization but do not call any adverts for iva debt management they tend to do what is best for them £££££ not you.

 

"The house is in my name only. When a creditor registered a charge for a small amount we discovered that the bank that holds the mortgage had never registered a charge. My wife then registered a charge to try to protect her years of financial input into the household. We are not estranged."

 

 

When did the creditor register the charge was it recent? and was it secured or unsecured the reason i ask is that a lot of loan companies are offering unsecured but reserve the right to make a charge over your property or assets.

 

Have you contacted the land registerer to find out from them who has a charge against the property? Do not rely on other lenders

 

Do you dispute your wife's financial input into the property as the property was in your sole name?

 

"It is probable that I will end up being made bankrupt so my question is where does the bank come in order of creditors? If they have not registered a charge are they treated the same as other unsecured creditors?"

 

The money you loaned from the bank was secured against the property so they will have first charge. It is a little complicated because they have not registered a charge against the property so in essence you are correct a solicitor would not know who to pass the funds too.

This would probably turn into a big mess and lot's of court cases and i must say i have never known any one be in your situation so it is very difficult to advise.

 

I have a lot of experience in the industry and the bank would have to peruse you for for the money in line with your other creditors they have 12yrs to hound you for the debt, if however you plan is to go bankrupt to make it all go away i feel you could face possible fraud charges as you know about the mortgage etc again very messy.

 

You must remember what a charge is on a property it is in lam-en terms a way of registering an interest in the property it does not define ownership.

 

How long have you and your wife been separated?

 

The reason i ask is a lot of people try this approach for example but the court will see right through it as it is tried time and time again. for example

 

Mr x owes thousands business fail's or he loses his job, in order to protect some capital in the property before going bankrupt they claim they have separated and his wife places a charge on the property.

 

mr x wants all of his debts cleared under a bankruptcy order then himself and his estranged wife get back together and have money that was denied to creditors during the bankruptcy.

 

They will look into your case very hard too as your estranged wife does not have her name on the mortgage they may require proof that she has contributed i bank statements etc money in accounts could be frozen.

 

Although this is a unique situation i will try my best to advise.

[Justhadenough]

We are not estranged.

 

 

 

Please take time to read posts before replying to say your wrong.

 

 

easy done aint it?

[garden123]

We have checked with the Land Registry and the bank has not registered a charge. The small creditor is first and my wife is second.

 

My wife can prove financial input but I understand it can look like a deliberate attempt to make herself a preferential creditor but to be honest, it is!

 

The bank involved is also our business bank and it is their actions that have driven us to this state.

 

What I do not know is - if my signing a mortgage agreement gives the bank a prior claim to the properly registered charges even though they have not registered. I know this is a complicated situation but cannot pay for the professional advice that I would normally seek.

 

The thing that I should make clearer is that, in reality, I do not want to run away from this debt but I would be very happy to have the bank in a weak position that would make them come to terms rather than force us into repossession.

 

Our dream outcome is that we sell our house, my wife uses her payment to buy a small house, I pay off some of the mortgage debt and carry the rest forward in an unsecured loan. I know it is a lot to hope for!

 

Thank you for trying to help.

Edited June 25, 2009 by garden123

[alfa1_steve]

Hi garden123

 

Firstly allow me to apologize for mis- reading your first post with regards to your wife.

 

If your wife can prove financial input that is a huge plus and i think you may have the bank in a weak position, i have had a chat with a few colleagues about a hypothetical situation very similar to yours infact;) and they have come to the same conclusion as myself.

 

If you sell the house now with out informing the mortgage company:

 

First charge to your small loan = the lender will receive it's money first.

Second charge your wife = will receive her rightful share.

Money remaining = Yours

 

The second possibility:

 

Inform the lender of there blundering mistake:

 

First charge to your small loan = the lender will receive it's money first.

Second charge your wife = will receive her rightful share.

Third charge = will receive what ever is left

Money remaining = Yours

 

From the mini debate we had a charge on a property is not based upon the amount of money owed but on a first come first served basis. Your bank is in a very weak postion as it would have to take the crumbs that are left.

 

To be sure that my (our) conclusion is correct i will contact our companies legal department and ask a friend i know how the law stands just to be sure as i don't want to give you any false hopes. But to my mind you have half of what you want already, but you know the law it's sometimes as bent and as twisted as parliament.

 

What i think would be helpful though would be a rough brake down of percentage that you think each charge will receive when the house is sold ie

 

First charge 15%

second charge wife 70% etc for each possible outcome.

 

The reason for this is to try and judge what kind of a position the bank would be in. Also the name of your lender(mortgage) might be useful so we could ask other gaggers about there experience with them and common procedures and scare tactics etc.

 

I will post later tomorrow approx 9pm or so.

[garden123]

Thank you so much for taking the trouble to look into this for me.

 

The figures would vary depending on how much we can sell the house for but at a hopefully realistic sale price the percentages would be as follows:-

 

1st Charge 4%

2nd Charge (Wife) 57%

Remainder for me or bank and other unsecured creditors 39%

 

If the bank had a 3rd charge and got the whole remainder it would represent 50% of the debt.

 

My credit card debts are very large as I was trying to support my business and so if the bank only got a proportionate share they would only get 25% of the debt repaid.

 

I had to sign for the charge holders to register their charge, so I assume that I will have signed for the bank to do this when I took out the mortgage even though they didn't do it. So I guess that as soon as they know the situation they will register the charge using the original paperwork.

 

The bank is the RBS.

[garden123]

Looking back through the paperwork I have, I think that when I remortgaged with them to a new product, they released the charge from the old mortgage but did not put a new charge on for the replacement mortgage.