Selling house but have a secured loan

[Claireodon]

This is not my problem really but trying to help out a relative who is in loads of debt (I'll call him Bob). Bob owns a house (mortgage in his name). His brother Dan gave him the initial deposit and paid half the mortgage every month (some sort of contract was signed with a solicitor at the beginning re this but not sure what it says). Bob has secured a £15k loan against the house without informing Dan. Bob has also defaulted on his mortgage many times and it is in arrears. Dan is angry because a substantial amount of his money has gone into Bob's house and Dan has now offered to buy the house off Bob. However, Dan can't afford to take on the secured loan as well. Due to his horrendous credit rating Bob cannot get a personal loan to pay off the secured loan. Is there any way round this situation or do they just have to wait for Bob's house to be repossessed and Dan will therefore lose all the money he has put into it?

Is the house in negative equity? (this is critical).

If not, if Dan buys the house from Bob, will Bob take into account the deposit and capital paid off by Dan?

Also, would the equity in the house cover the £15k personal loan?

In the meantime tell Bob he's a fu**wit to screw his brother over like that.

Brotherly love eh?

No, the house is not in negative equity. Bob paid £78k for the house originally and has take out a £15k secured loan. Its market value is now approx £110k.

Dan will buy the house from Bob for £78k. He is not prepared to cover Bob's £15k loan and he would not be able to get a mortgage for £93k even if he wanted to.

I am seeking advice to avoid a full scale war.

what is the money owing on the mortgage?

why should dan get a 110K house for only 78K?

bob owns the house and should sell on open market - he should sell house on open market for 110K. what benefit is there to sell for only 78K? only benefit is to dan.

then bob pays back his loan and pays to dan whatever dan thinks he is entitled to eg the original deposit.

Dan paid the deposit and half the mortgage every month, so he should get back more than just the deposit. But agree that the house should be sold on open market, mortgage repaid, secured loan repaid (there's no alternative to this) and then Dan gets (most of) the rest.

I don't think the house can be sold , even to Dan with a second charge on it, without Bob having paid off the loans first or from the proceeds. Is Dan named on the current mortgage and deeds ? tbh it rather depends on the terms of the contract too.

The house can be sold on the open market for £110k with the permission of the secured loan holder. They would probably agree, especially if there's a risk of repossession. They would make it conditional that the proceeds must cover both the mortgage and the secured loan.

So, Bob gets £110k (lets ignore fees for now), repays the secured loan holder the £15k. He now has £95k left.

He repays the mortgage (lets assume this is £70k- eg house was bought with 10% deposit). He now has £25k.

He then repays Dan the deposit (I've assumed this is £8k)

The remaining £17k is effectively Bob's but should then be split between them as they agree. If I was Bob I'd probably give Dan the lot and hope that that meant he would still speak to me