Secured Loan against Property we no longer own...help!

[gregpicard]

Hopefully someone will be able to help me out with this!

 

My parents took out a Secured Loan over 15 years ago with RBS on the home that we owed at the time (We have moved home 3 times since then)

 

A couple of weeks ago, they received a letter demanding payment of the remaining sum on that loan.

 

The letter clearly states that the guarantee is against our old property, and that they may 'reposses' if we don't repay the outstanding sum.

 

From a legal point of view, they are not sure where they stand. Obviously, we have not owned this property for over 10 years since it was sold. As far as I am aware, when we sold that home it was sold for a profit so there was no negative equity.

 

Would the bank have claim to our current property / assets against this loan? Or is there any kind of loophole that would somehow void us having to repay the outstanding sum since the asset that the loan was guaranteed against is no longer owned by us?

 

Many thanks

[gregpicard]

I should add, the loan was for £24,000 (incase the amount is a factor in any legal issues etc) and the amount the bank are after is £18,000

[Bandit127]

The loan would have become unsecured when the original property was sold. However, I think it still exists legally.

 

They cannot (currently) make a claim for security on your current property unless they have a charging order from court. They would have had to get this at some point between you selling the old house and now.

If they haven't got one, they may try to get one.

 

Can you go back to the conveyancer at the time and see what happened? (This should have been paid from the proceeds of the sale).

 

The statute of limitations on this is probably 12 years - when was the last time they paid (or offered to pay)?

[gregpicard]

Thanks for the reply Bandit

 

They had been paying up until about 6 months ago, when my father lost his business and was unable to make payments. So they are 6 months in arrears on that. They are back on their feet finance-wise now, and are able to make repayments, albeit not up to the amount that was agreed. So they could try and negotiate a lower amount of monthly repayment until they get into a better financial position (currently they are recovering from 6 months mortgage arrears too).

 

I would imagine for the bank to go through that court proceedure would be a long and dragged out process and they would rather agree a repayment reduction than have to resort to applying for a repossession on our home?

 

The confusion was really on the fact the bank are threatening to repossess our old home on the letter. It's a bit of a relief that they don't have an immediate claim over this current property.

[Lea_HTH]

It will be really simple for them to get a charging order over the current home, and it won't take that long either.

 

They might be prepared to accept a settlement figure. Negotiate.