If I own 1/3 and my sister owns 2/3 of her home, can she extend her mortgage without telling me?

[deaconblue]

Originally she took out a mortgage for £90,000, we paid £43,000 to enable her to buy a house and own 1/3 of the property. She is now selling and stands to only just break even, but my mum thinks she's seen a mortgage redemption letter stating the mortgage is £100,000. If this is true we would lose £10,000 of our original investment as the bank gets paid before we do.
Can't get a straight answer out of sister as she just says her ex- husband dealt with all the finances.
Can't believe it would be possible for her to do this as we have a deed of covenant on the property, but am wondering if we have been hopelessly naive and have been screwed over by sister and her ex,

Poor you! Can't help I'm afraid but bumping for you

If this was me I'd be pushing my sister for an answer - whether her ex dealt with finances or not she would have surely had to sign for any further borrowing?

No ALL interested parties have to sign to release equity I have owned a few properties jointly and don't think you can do much without the other persons permission

depends if you are named on the title deeds or not? Did you draw up a contract when you gave her the £43k?

If you are on title deeds as part owners then I don't think she could have extended the mortgage without your approval.

It is possible that she hadn't paid the mortgage which is why the debt has risen to £100k from the orignial £90k?

The extra could be redemption or other fees rather than her extending the amount of the loan?

she still claims she has an unsecured personal loan with same company as her mortgage. Her ex-h told my dh today that they have taken a loan secured against the house for £15,000. So who knows who's telling the truth and it looks like even more of our money has disappeared. Worse thing is that sister, ex BIL and my mum all think we are being money-grabbing by worrying about losing our investment!!!

The following won't give you all the answers, but for a £4 fee you can search the Land Register Online Website and find out if there are two charges registered against the property and the dates of those charges. You wont, unfortunately, be able to see how much the charges are for. It's some time since I used the site so I can't recall if there's a sliding fee of charges if you ask for more information.

You need to call the mortgage lender immediately. Are your mortgages with the same lender? Your own mortgage lender will be able to tell you what's allowed even if they can't give you details of her loan. Surely they should be able to tell you?

Because if you are not allowed to do this, and she has, then either she has falsified your authority on papers or the bank may be actionable in some way.

I have no experience in these matters but it sounds awfully fishy.

If your mortgage is with a different lender her lender would have to inform them of sny further charges on the house.Def pay teh £4 and get the info from the LR.You are not being money grabbing at all

Your sister wouldn't have been able to secure further borrowing against the property without your consent if you are named on the title of the property. I am presuming when you bought the property your sister and you used solicitors who put you on the title as tenants in common.

If your sister has secured further borrowing against her name, but NOT the property, then you have nothing to worry about.

Charges on the property will rank in order of the mortgage lender first (Halifax or whomever) and then your charge securing the £43,000 you lent to her (again, I am presuming that this was placed on the title in the form of a second charge - any solicitor worth their salt will have ensured you protected your money like this).

If she has taken an unsecured loan out, that's her and her ex-husband's problem. It won't take a chunk of equity out of the house.

When the solicitor is working on the sale of the house he will contact the first mortgage lender for a redemption figure (this may include the unsecured loan, along with early redemption charges etc) and he will also contact you - or it may be clear on the title how much your charge is worth, perhaps it's expressed as a percentage?? Once the solicitor has ensured he has enough money from the sale proceeds to be able to discharge the loans on the title of the property he will then go ahead with the sale. It is a legal requirement for the solicitor to have ensured this in the first instance. If there isn't enough equity - ie if the house has £130,000 worth of loans against its title and is being sold for just £120,000, then the solicitor has to put things on stay until the seller forwards money to him to cover the shortfall.

From what you've said, you own 1/3 of the property so there's little doubt that you are named on the title. You are probably named as tenants in common with the percentage split 66.6% your sis and 33.3% you. If this is the case, and there's nothing else such as a charge entered on the title or a specific delcaration of trust mentioning the actual amount involved then it could be that you're just down as having a percentage share.

Really, we need some more info on what exactly happened at the time of purchase.

Also, your sis's solicitor will need your sig on the transfer deed and the contract for sale so surely they've been in touch with you about this anyway? If not, they will be and you can just ask them.

I think we were really naive as all we have legally is a convenant which is attached to the property so they couldn't sell without our consent but it seems are perfectly able to borrow money against the house. We paid cash for our share of the house. The galling thing about all this is that we did this to help them get onto the property ladder, we wish now we'd just left them renting.

How did you attach this 'covenant' to the title?

do you know what's awful to have to admit, I haven't got a bloody clue. When I write it down it sounds unbelievable that someone would give such a massive amount of money without fully understanding how to protect it. WE followed what my sister and BIL's solicitor suggested. I believe that the deed of covenant is flagged up at the Land Registry should they try to sell without our knowledge but that we aren't protected in any other way. Does that make sense?

Kind of.

I am a little worried that your money isn't noted in any other way?

For example, when my clients are buying their house with funds from elsewhere, I have a duty to find out about the person providing the extra funds for money laundering purposes. It's within this letter/s I'll advise them in the STRONGEST terms to seek independent legal advice.

The advice I would give is to lodge a CH1 form at the Land Registry when registering the new owners. The CH1 sets out the term of the loan and lodges a charge against the title of the property - a second mortgage.

That means that when the property is sold, the first mortgage gets paid and then your charge will get paid.

If you can't remember doing anything like this then it may be that you are just down on the title as a joint owner of the property. I am hoping that you are down as tenants in common with at least your percentage interest noted. However, this is all well and good in a market which is on the up. When the market is on the down the percentage gets less and less as the days go by, this is why the CH1 is better as it sets out the specific amount.

I would say no to the sale (as it appears you have this power) until this is sorted out.

You need confirmation from the solicitors dealing that you are going to get your £43K before you sign consenting to the sale.

You need to get in touch with the solicitors dealing and find out exactly what's up.

I would seriously be looking at the original transaction also. If the sols who dealt with that didn't mention anything as I have done above to protect you, find out about you before you provided the funds etc then I'd be thinking about contacting the Solicitor's Regulation Authority. There are some things we HAVE to do, legally and morally, within the course of our work and if they haven't followed the rules and you lose out as a result you may be entitled to some recourse.

I hope that makes sense, baby booting me in the ribs at the mo am distracted!!

cfc, thank you so much for taking the time to give such detailed advice (especially with baby digging ribs) will show this thread to dh and we'll consult solicitor

You're welcome, I hope you manage to sort this out. Try not to worry too much, like I said, you obviously have the right to say no somehow so this is your bargaining chip. Take heart and do let me know if you are having trouble figuring things out.