Inheriting mortgage when buying house?

cattybb

We're looking at buying a (very cheap) house out in the country at auction.
I'm just wondering what the possibility is of being legally responsible for a defaulted mortgage from the previous owner?

Sorry if this is a silly question, I assumed a mortgage is attached to the owner but someone mentioned to me that mortgages can be attached to the house itself.

The contract has the following attachments, which got me wondering:

Bank Documentation:
1. Copy Deed of Mortgage and Charge dated 20 October 2010 between (1) XXXX and (2) Irish Life & Permanent plc (the Mortgage and Charge)
2. Redacted Copy Deed of Surrender of Vacant Possession dated 17 August 2017 made between (1) XXXX and (2) Permanent TSB.

I'd ask my solicitor, but his father just passed away so I don't want to bother him unless I'm 100%. I'd appreciate any advice!

Hitman3000

You need clear title, to try and buy under any other conditions even if you could would in my opinion be madness. You need proper legal advice. Plus if you are hoping to use a mortgage to buy the property it won't happen if there is a charge against it.

cattybb

Many thanks!
Can you explain what having a charge against it means?
I think I'm going to have to hassle my poor solicitor (:

Hitman3000

cattybb wrote:

Many thanks! Can you explain what having a charge against it means? I think I'm going to have to hassle my poor solicitor (:

It means the bank has an interest in the property and this needs to be discharged. E.g. the bank is owed 50k on the house this has to be paid before the title is clear.

busylady

Your solicitor will ensure that you will get clear title free of any charges - there is probably a condition in the contract stating that the mortgage will be redeemed out of the sale proceeds, which would be standard.

Peregrinus

cattybb wrote: »

Many thanks!
Can you explain what having a charge against it means?
I think I'm going to have to hassle my poor solicitor (:

The whole point of a mortgage is that it gives the lender some security that he will be repaid. It works like this.

- I borrow money from the bank, and I mortgage my house to the bank to secure the borrowing. (Often I will have borrowed the money in order to buy the house, but this doesn't have to be the case.)

- As long as I meet the repayments on the loan, there's no problem.

- If I fail to meet the repayments, the bank "enforces its security"; that it, it heads off to court, proves that I am not repaying the loan, and gets a court order authorising it to sell the house.

- Armed with that order, the bank sells the house and repays itself out of the sale process. If there's anything left over, they give it to me.

- If the sale proceeds aren't enough to clear the full amount of the loan, I still owe the shortfall to the bank.

Right. If you're buying a hose which is subject to a mortgage, you will not buy unless, as part of the sale, the bank releases the house from the mortgage.

This is pretty standard stuff; a huge proportion of residential properties are mortgaged. Part of the sale process involves the seller's bank releasing the house from the mortgage, and (often) the purchaser immediately mortgaging the house to his bank (to secure the loan he has taken out to finance the mortgage). For solicitors who handle property transactions this is absolutely routine stuff.

If the owner of the house has already defaulted on his loan, this complicates matters, but only slightly. It may be that the house has been taken by the bank and is being sold by them, in which case your solicitor needes to check that, yes, the bank really does have authority to sell the house. But the business of getting the house released from the mortgage is the same. No purchaser will buy the house unless, as part of the sale, the seller's bank releases the house from the mortgage. This is true whether or not the seller has defaulted on his loan.

Robbo

That the Deed of Surrender is redacted is a fairly good sign that the previous owner did some kind of deal with PTSB on the mortgage.

cattybb

This is brilliant info, thanks a million everyone. I've just been in touch with my solicitor, and it's good to have a better understanding of all of this. Fingers crossed!