We had an interesting couple of cases yesterday; both where time was of the essence. One case was about a property which was involved in a family dispute. The property had been transferred into a family member’s name, so that it could be used as collateral to raise debt. The property was then geared to the hilt. The individual concerned got into some trouble with the HMRC, this then resulted in the property being frozen. However, there existed a trust deed. This means the legal owner is not the beneficial owner, the legal owner is holding the property in trust for someone else. This agreement did exist, and had been witnessed by solicitors; there was other evidence as well. This did not stop another £30K being spent in legal fees, to enforce this agreement against HMRC.
A side issue was the current mortgage provider refused to accept money from anyone else apart from the named borrower. This has resulted in arrears and the possibility of repossession. To compound the issue the property has been converted illegally into a couple of flats. Furthermore, they have been punted around to a number of lenders via a broker, one who had done a valuation and then rejected the case. Not a pretty picture. Most lenders would not be able to get their head around the issue of trust law, which originated from the 12th century during the time of the crusades. This, compounded with an illegal conversion, would not fit into a criteria led lending scenario.
This kind of deal has been dealt with using a machine gun. It should have been a sniper.
Having understood the case and the salient points, we are confident of placing it with the right lender. It would require us to speak to a senior underwriter to first ensure the case goes through without touching any posts. It may require a twofold approach where we choose a temporary lender until the planning has been regularised, with another long term lender to follow.
In addition to this case we came across an investor who is in danger of dropping his 10% deposit as well as the properties he has exchanged upon at auction. The completion period of 6 weeks has expired, as well as the notice period. It seems the auctioneer is keeping the properties for him purely out of discretion but it is borrowed time. He needs all of the funds to be extracted from an existing property which has lapsed planning.
Neither of these cases could be described as plain vanilla; and both could have been avoided. But, hindsight is a wonderful thing. I guess it gives us something to get our teeth into and show our mettle.