Reneging on purchase deal after mortage has been paid?

by Readers Question

9:18 AM, 23rd May 2019
About 3 months ago

Reneging on purchase deal after mortage has been paid?

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Reneging on purchase deal after mortage has been paid?

A friend of mine agreed with his landlord/owner (a relative) 2007 to pay the mortgage on the verbal agreement that the property would be transferred into his name. Every mortgage payment has been made on time and directly to the bank, since the agreement was made.

Recently the owner has indicated that he wants to sell the property and is trying to get out of the deal which was made when the house was in negative equity and now it is not.

My friend has just had the mortgage payment due on the 1st of May 2019 returned by the Bank lender without explanation and the same happened a second time.

There is nothing in writing re the sale arrangement and no tenancy agreement. The mortgage amount he is currently paying is well below the market rent which in itself confirms that there was a “sale” agreement done.

It is believed the owner is in financial difficulties.

I know there are so many things to consider eg how easy would the bank be able to evict my friend – he has tried to pay the mortgage due this month twice. What a mess!

Any help or ideas very welcome please

Martin



Comments

Neil Patterson

10:42 AM, 23rd May 2019
About 3 months ago

Hi Martin,

Are you sure there was nothing but a verbal agreement?

Was there a rental payment on top of the mortgage payments?

THALIA K

11:03 AM, 23rd May 2019
About 3 months ago

I am sure that the agreement could be regarded as an oral agreement which was acted upon and therefore, enforceable.
The fact that your friend was paying the mortgage, means that he was acting on the agreement and believed that he would get the flat at the end of the road. Therefore, if I am correct in this, if he goes to court he will get the flat. But he has to convey this intention to the seller and make his position clear that he intends to enforce the sale.

moneymanager

12:03 PM, 23rd May 2019
About 3 months ago

"section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 specifies certain formalities for contracts disposing of interests in land, which include that they must be in writing and contain all the agreed terms."

But you might want to look at this case which found oral contracts for interest in land can be enforceable, it was upheld on appeal.

http://communities.lawsociety.org.uk/property/news-and-updates/property-commentary/is-an-oral-contract-for-the-sale-of-land-enforceable/5060160.fullarticle

Ian Narbeth

16:03 PM, 23rd May 2019
About 3 months ago

Martin
It looks as if there may be a trust arrangement in place. Please contact me. I may be able to help.

Martin Rdg

12:38 PM, 24th May 2019
About 3 months ago

Nothing in writing! and no rental amount paid on top of mortgage payment

Puzzler

10:27 AM, 1st June 2019
About 3 months ago

Interesting, whichever way you look at it the resident has had a good deal, he has paid less than market rent for 10+ years. So it is the equity which is in dispute, I can't say which way that should go, my personal view (I have no legal credentials) is that it should remain with the title-holder since he was legally responsible for the mortgage and it is they who would be pursued for any arrears. The resident paying the mortgage was actually paying a low rent albeit direct to the lender. There is an implied tenancy, I think. Whether the verbal offer to sign over the property is enforceable, I don't know (it could be). The more pertinent question is the resident's rights of occupancy if the property is sold. When was it intended that the transfer take place? How was it to happen, a remortgage in the resident's name? Or after the term had ended? If these things were not specified it wasn't really an offer....A lot also depends on the family relationship in question.

Puzzler

11:20 AM, 1st June 2019
About 3 months ago

I have just done a wee bit of internet research, a promise has no contractual standing unless something was given in exchange for it (consideration), it is otherwise just a promise …..

Puzzler

17:51 PM, 1st June 2019
About 3 months ago

Reply to the comment left by THALIA K at 23/05/2019 - 11:03
I presume you mean transfer? it is not in his interests to enforce the sale unless it is established that he is the beneficial owner

Puzzler

19:30 PM, 3rd June 2019
About 3 months ago

Do contact Ian, as I am not fully sure but there is a case Errington v Errington Wood (1952) in contract law which seems similar and which might support your friend's action.

Just Justice

20:03 PM, 4th June 2019
About 3 months ago

Reply to the comment left by Ian Narbeth at 23/05/2019 - 16:03
Hi Ian,
I am the friend that Martin has mentioned in this post. I would like to discuss this matter with you further - how can I get in touch with you (I am not on Twitter or Facebook).
Thank you.

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