From: "peterwn" 
Newsgroups: uk.finance uk.legal
Subject: Re: Add wife to house ownership
Date: 26 Oct 2006 12:18:10 -0700
   posting-account=8D85vw0AAAAiMnnpAsD-EL5vPp2ladgQ


John Boyle wrote:

> >Is this likely to be a problem if the mortgagee then effectively has
> >two guarantors to the loan instead of one?
>
> ?? Who mentioned guarantors? I dont see any need for guarantors.

I was using the term loosely.  If the mortgagee forecloses and sells,
but there remains a shortfall, then the mortgagor is liable for this,
and if there were two 'partner' mortgagors, then each can he held
liable for the whole amount.  A mortgagee is therefore better off with
multiple mortgagors.

> > The mortgagee improves his
> >or her position which ever way one looks at it since it can 'go' either
> >party for the whole outstanding amount.
>
> But the new mortgagor could have other debts that make them bankrupt or
> fall into debt and creditors may place a charging order on the house,
> etc., etc., or they may already be bankrupt.

But any charging order would rank below a mortgage.  I agree that a
mortgagee might be at risk if the mortgagee was 'under notice' as to
any defective status of the wife's finances.  However it would be
unlikely that such a transaction could be contemplated in such
circumstances.

> > The mortgagee's only concern
> >would be that its position is not potentially undermined by future
> >claims of 'undue influence' etc, but its interests in this regard would
> >be easily respected.
> >
>
> No it isnt 'the mortgagee's only concern' at all. Every domestic
> mortgagee in the country will make some assessment on the new mortgagor
> although they are unlikely to take any notice of the level of income
> unless more money is being borrowed.

This would seem reasonable.

However, given pure common law mortgages (forgetting about any
registration systems), the mortgagee owns the property and the ordinary
'owner' merely has right of redemption.  It would seem that the 'owner'
can convey the right of redempition (but not the obligation to pay off
the mortgage) to another without any reference to the mortgagee.  The
Torrens registration system (as used in Australia and New Zealand)
completely upends this, but I am unaware of the effects of the nglish
registration system on this.

>
> 'Undue Influence' usually only comes into it when new money is being
> lent for the benefit of only one of the borrowers. In this case she is
> becoming a joint tenant and is benefiting from now owning all of a
> house.
I was thinking of 'undue influence' between the partners, not with
respect to the mortgagee's liabilities (this being the the usual cases
where there has been so much wailing and gnashing of teeth over the
years).

In this instance it seems all the husband wishes to do is clarify the
ownership of the house in equity (ie who contributed what) and then
align 'legal' ownership to suit.  At least this is the order in which
to approach the problem.  Actually once the equity ownership is sorted
out, it does not really matter that the wife's name is on the title.
At all times to the extent that the wife has put money in the property,
the husband by being the sole 'legal' owner of the house is effectively
a trustee for the wife's interests.

Therefore it is probably a waste of money for the husband to 'transfer'
part of the legal ownership to his wife.  This would be even more so if
they were contemplating selling up in the near future.  They could
simply register their new home in joint ownership.