From: John Boyle
Newsgroups: uk.finance uk.legal
Subject: Re: Add wife to house ownership
Date: Thu, 26 Oct 2006 23:30:58 +0100
In message <1161890290.411245.292980@e3g2000cwe.googlegroups.com>,
peterwn writes
>
>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.
I take you point.
>
>> > 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.
I dont think such notice would matter. A subsequent mortgagee could
bring the whole thing down. Strangely, I understand some b/soc legal
charges dont properly account for further advances or the rule in
Claytons case which means that in certyain cases some of the primary
debt can rank after the subsequent mortgage. It will be very rare,
adnittedly, but has happened none the less.
> 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.
>
I agree!
--
John Boyle
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