Shortfall after sale of business premises

[Frantic50]

On Thursday I am off to see our local Housing Advisory Service rep to see if there is anything we can do. We are really struggling financially with having three children. We are already borrowing money left right and centre from family and friends in order to buy everyday things. My oldest starts high school this September and I had to beg money from my father to be able to buy his uniform. That was heart-breaking. We don't smoke or drink or go out or spend anything that is not necessary. It is a really difficult situation. We are not trying to keep the house because we think we deserve to or for profit. It is purely that we currently only pay interest only mortgage and that is considerably less than we would have to pay in social housing rent. It is a lose/lose situation for us at the moment. We do have inheritance money expected in the future but I can't see a judge stopping the repossession when it comes to it on the basis of 'ifs and maybes'.

Sorry to ramble on. It's good to get stuff of your chest sometimes. Hopefully the Housing chap on Thursday will have some sound advice, which to be honest, apart from advice from people on this forum, is pretty hard to find.

[Frantic50]

Hi there - the mortgage company have to meet certain obligations when they are selling a house after repossession. They need to market the house responsibly and with your best interests in mind. Yo should send a Subject Access Request to the mortgage co to see what comes back regarding the repossession and to see if they have adhered to the rules. If they haven't then should they take you to court for the shortfall you can defend based on their non compliance. You would also put them to strict proof on the charges they have put on the balance.

The Council of Mortgage Lenders have set out the following:

HANDLING OF ARREARS & POSSESSIONS -

CML STATEMENT OF PRACTICE

Sale of Properties in Possession

18. When selling properties which have been taken into possession lenders are under a duty to obtain the best price reasonably obtainable. A lender is not bound to postpone the sale in the hope of obtaining a better price at some future date; however, the lender should allow sufficient time to permit, for example, proper advertising so that the best price obtainable may be achieved. Mortgage lenders generally use the following administrative procedures for selling properties which have been taken into possession.

Administration

(a) The sale may be dealt with either via a lender's in-house department or through a separate property management company employed by the mortgage lender. Dedicated staff are responsible for co-ordinating the sale of properties in possession which will include reviewing the offers received from potential purchasers as well as monitoring the condition of these properties and their valuation.

Valuation

(b) A valuation of the property is obtained from either one or two qualified surveyors and another from the appointed estate agent. Prices will be reviewed regularly based on local circumstances.

Estate Agents

© Properties are usually marketed through an estate agent in the immediate locality of the property being sold. Agents may advertise properties in the local press, with such advertisements being repeated as and when necessary. Mail shots and national advertising may also be carried out in some cases. In general, lenders do not market these properties as "repossessed properties" and estate agents may be specifically instructed not to do so.

Report on Activity

(d) Estate agents are usually required to report regularly on activity if a property remains unsold. The estate agent will notify a mortgage lender of offers received. Only when satisfied that the best price has been obtained, would the estate agent recommend this offer for acceptance. If the offer is substantially below the asking price, the agent must provide supporting evidence to suggest that this would be the best offer obtained. In practice, all offers are accepted or declined promptly. Where there are a number of very close offers on a property, a sealed bid procedure may be carried out whereby the person putting forward the best offer would be the successful buyer.

Visits to the Property

 

(e) The agent will usually visit the property on a regular basis and ensure that any necessary repairs and maintenance to the property are carried out and that the property is secure. When properties are first put up for sale, mortgage lenders will usually arrange that essential repairs, cleaning and tidying of the garden are carried out. Whilst the estate agent will take care of minor repairs which are identified on the regular visits, other repairs usually require the approval of the mortgage lender. Where this work is carried out, estate agents will be required to obtain competitive estimates. Prospective purchasers will normally be accompanied by the agent when viewing a property.

Auction

(f) Properties in possession may be sold via auction. These properties are reviewed relative to sales experience and the length of time on the market. There are occasions when properties may be sold by auction because either the auction is specifically targeted at the type of property in question, eg a period type of residence, or the property will generally appeal to the speculator market because of its condition. Such properties are referred to an appropriate auctioneer. A catalogue would be issued and the properties are available for viewing.

 

 

Just hoping Ell-en is online. This is an old post I know but have been looking through this morning and hoping for some advice.

 

 

Does the CML also cover commercial property? Can I just give a quick summary of what's been happening to me.

 

 

I took out a loan to buy a business and business premises. Business failed for several reasons. The loan had 1st charge against business premises and 2nd charge against my home. Business premises was sold at auction after only two months for 50% of value. Have complained at length and tried to get advice from different agencies but nothing has helped. The position is now that there is a shortfall which will come onto my home and it will be repossessed. I have no money at all to contribute to the debt so I am in no doubt that the house will go. I have a young family I am trying to support. I just don't know what to do. Know doubt the bank will repossess and sell the house at a massive loss too and there will be even more debt. I too can not go Bankrupt due to my job. If I do I will loose my job. I considered selling the house before repossession but the council have told me that if I do they will not re-house my family. Any small piece of advice would go along way and I would appreciate it immensely. I really am at the end of my tether. Speaking to my local council is terrifying when they talk about 'homelessness' 'emergency housing' and they have even said that we are likely to be split up as a family in order to accommodate us in the short-term. I can't let that happen.

[Ell-enn]

If you put the house on the market would you be in a position to rent privately ? Of course it is not guaranteed that your home would be repossessed - is there enough equity in the property to accommodate the shortfall ? If you have a young family the court would have to take that into consideration.

 

I'm not sure if the CML applies to commercial property - perhaps a call to the CML to clarify would help .

[Frantic50]

If you put the house on the market would you be in a position to rent privately ? Of course it is not guaranteed that your home would be repossessed - is there enough equity in the property to accommodate the shortfall ? If you have a young family the court would have to take that into consideration.

 

I'm not sure if the CML applies to commercial property - perhaps a call to the CML to clarify would help .

 

 

 

 

 

Ell-enn - thank you so much for responding I have seen how helpful you have been with others in this awful situation. It's sickening that this sort of thing is happening over and over again.

 

 

Our problem is we have such limited funds that private renting just isn't an option, even council accommodation is going to stretch us beyond belief. The only asset we have is the house, we have no savings at all. The bank have asked for £1500/month to clear the debt which we can't afford. I only bring home £1500/month and my partner isn't working at the moment due to the cost of childcare - it just isn't cost effective for her to do so.

 

 

We currently owe £95K (original debt was £145K - £56K which they got for the sale of the premises which had been valued at £115K + £6K in interest that they are charging. The house is worth approx. £160K and the outstanding mortgage is £69,200K so we have no equity.

 

 

We currently have a complaint with the FOS due to some issue we have had with the bank. They have therefore put any further proceeding on hold until the FOS decision has been made. However, I have received a preliminary decision from the FOS and it is in the banks favour so I don't think that will come to anything.

 

 

The bank ask us to seek re-mortgaging or borrowing from family or friends. My partner went to see our mortgage provider yesterday but they want lend us any more (which we knew anyway but wanted to go through the motion as Lloyds had suggested it).

 

 

We are in a hopeless situation. We bought the business to make a better life for our children and instead things have ended up in this horrible way. We have not got into this situation because we've run up debt by acting irresponsibly and it is so unfair.

 

 

I don't doubt that Lloyds will seek possession soon and if we can't make any payments (beyond a couple of hundred pounds/months) I can't see a judge acting in our favour even if we do have three children.

 

 

If the LPA had sold the property for nearer to the market value things may have been different. The repayments would have been considerably less and, with help, we may have been able to do something.

 

 

Sorry to ramble on Ell-enn. I am at the end of my tether. My partner is in a terrible state and constantly in tears which is having a bad effect on the family as a whole.

[Ell-enn]

Well they might ask for £1,500 per month to clear the debt - it doesn't mean you have to pay them that much. Can you do a budget sheet to see exactly how much you actually have spare each month ? I have affixed the one we normally use - it calculates automatically as you fill it in. You would have to do this exercise anyway if the case does go to court.

 

Have you asked for an explanation of the sum they claim is owed and how the property was marketed/sold? I have affixed a template letter which asks for the information.

 

If you send a postal order for the £10 fee you should make sure you write your name and address on the back together with the words "fee for Subject Access Request Only" just in case anyone takes it as a payment towards the account. Also, take a photocopy of the PO front and back and keep safe with a copy of the letter. Send recorded delivery and check on the royalmail website a few days after posting to print off the signature receipt - keep this safe also in case you need to prove they got it.

[Frantic50]

Hi Ell-enn

 

 

Thank you for this. I will complete the budget sheet. I have completed an ALIE for the bank already (they asked me to do so when I complained about the interest they were charging. This is one of the complaints that has gone through to the FOS as they have continued to charge a high rate of interest despite me being in financial hardship, something I believe they are supposed to re-consider when adhering to the Lending Code). That came out that I had £114.33/month disposable income.

 

 

I have already requested and received the documents from the SAR. There was information contained within the documents that are the basis of another complaint with FOS. I'll explain briefly. Staff had made 'off the cuff' remarks on internal documents concerning my commitment to the business. In fact on one document one colleague states to another "just put customer was not committed to business" as reason for failure as if they had just plucked that out of the air ! This is absolutely not true and I have several pieces of evidence to prove otherwise. I want bore you with all the details but the point I raised with the FOS was that in the event of a court case any Lloyds representative will influence a judge as to my integrity based on these untrue remarks. I may be clutching at straws here but I'm sick of these people thinking they can do and say whateer they like.

 

 

With regards to the marketing and sale of the property Lloyds said they could not provide any information and I should seek what I need from the LPAR. I was pretty disgusted that Lloyds wouldn't take any responsibility for the sale of the property. Anyway, I did contact the LPAR and they said they said that they chose to sell at auction so quickly to save on interest that was accruing (yea, right, that's why Lloyds charged me £6K last year). The LPAR also charged for things like insurance (which I had in place myself), and EPC (which I already had) not to mention their fees, legals, maintainence etc. In total another £6K. Every complaint I've made to Lloyds about the way the LPAR behaved Lloyds have just said "nothing to do with us". Even the FOS didn't want to know.

 

 

Sorry to waffle on, it just gets me so angry. Thanks Ell-enn.