Negative Equity

Katie10

Just wondering if anyone been through a separation where the family home (joint names) is in negative equity. Neither can afford to pay mortgage and pay utilities- massive house in the middle of nowhere. Lived there for a year after breaking up- he never paid cent towards anything- left to rent as couldn't afford to pay for everything (work part-time). Just wondering in general what judges are ordering in these cases as this all very new to the family courts

noxqs

First of all, this isn't new to the courts at all. This is in fact extremely common and has been for decades. Secondly, the laws in this area hasn't changed for a long time.

Your best bet is to talk to a solicitor.

If you're a joint mortgagee you will pay 50% of the debt, regardless of the actions of the other half.

Katie10

Have spoke to solicitors but no one seems too awful sure about it all. They all say this kind of thing has really only become an issue in last couple of years with the property crash. She is to have a chat with a barrister

StillWaters

I'd change solicitor tbh. As has been said, this is not complicated. Each party is responsible for 50% of the debt. Getting a judgement in court is meaningless until you get bank approval to sell, or one of you can raise a mortgage.

DonalK1981

Not 50%, each is liable for 100%. Banks won't stop at 50%. Joint and severally liable it is called. Think about it.

Jo King

The court cannot order a sale of the house if it is negative equity as the mortgagee must consent to a sale. The usual thing to do is get an offer for the house and approach the mortgagee about consent to a sale. In some cases the mortgagee will consent to sale and agree not to pursue shortfall.
The court has a complete discretion with regard to apportioning assets and liabilities and ordering maintenance. This is done by taking into account the reasonable needs of each party.
In general the courts want the property sold if at all possible. Renting out long term is regarded as too messy and will not bring finality for years.

The_Conductor

The key to all of this is liaising and communicating with the mortgage lender. Any ostrich approach- will result in the lender petitioning for repossession. To date repossessions have been quite low (given the level of poorly performing or non-performing mortgages)- and have tended to be clustered in the BTL sector. With the sale of BOI and more aggressive tactics from the other lenders who have interest to pay on their bail out funds- this looks set to change.

Either or both parties are singly or jointly liable for the o/s mortgage and if a sale is insufficient to satisfy the o/s mortgage, any shortfall.

Irish banks have been anxious to convert any o/s debt after a property sale into a term loan (typically with 15-20 year repayment terms). Some lenders- such as RBS, Rabo and others who are exiting the Irish market, have shown a greater propensity to write off any debt over after the sale of the property- rather than converting it to a term loan that would need to be managed over a protracted period of time. To date- these write-off arrangements have been focused on foreign entities closing down their Irish operations, rather than Irish banks.

It really is a mess- you need to get a family law solicitor to formalise arrangements- and then jointly approach the lender with a viable plan- if this plan is the disposal of the property and an apportionment of any o/s debt- so be it.

You need to get your skates on though- rather than messing around with family law courts (obviously the separation is a separate issue)- as the resolution of the negative equity issue- is wholly a separate issue.