Readers regularly ask me questions about real estate. Here is a question about the bank’s recovery for non-payment of the mortgage:
“A friend no longer has the means to pay her mortgage on her own and her partner is refusing to pay. She made a down payment of $100,000 and the remaining balance of the mortgage is $300,000. If she lets the bank sell the house, does she have a guarantee to protect her down payment? If not, what advice would you please?
“They are married, but she is the one who paid the deposit and that is mentioned in the notarial deed.”
Madam, your friend has several options available to her depending on her situation. What should be clarified first:
The certificate of ownership
If the spouse is listed in the notarial deed, this would be rather unusual, as he is then officially co-owner of a house for which he has not made a down payment and is not involved in paying off the mortgage.
To correct this situation, another notarial deed must be drawn up naming the company as the sole owner. This involves costs and your friend will have to prove to the bank that she is able to take on the mortgage herself.
If the wife refuses, she could file a lawsuit for unjust enrichment, emphasizes Me Luc Audet, lawyer and business consultant at Les Avocats de Solutions inc. However, this would undoubtedly mean the end of the couple.
The financial situation
Since your friend is talking about the possibility of the bank repossessing the house, she is probably in serious financial trouble. If this is only temporary, your friend might consider conducting a property rescue. What is it about?
The rescue process takes place in several phases. First, the house is sold to a company that specializes in rent-to-own. The deed of sale contains a repurchase agreement that specifies at what price your friend can repurchase it and when the repurchase should occur, usually after two years. During this time she lives in the house and pays the rent while the company pays off all debts. At the end of the term, your friend’s financial situation will have improved and she will be able to buy back the house at the agreed price by obtaining financing from a financial institution.
This is the solution you should consider if your friend is experiencing temporary financial difficulties. On the other hand, if his difficulties are persistent, you will have to think about selling the house.
Diploma
Your friend has several options available to solve her problem. One thing is certain: if she needs to sell her house, it would be better for her to do the sale herself and not hand it over to the lending financial institution. In this way, she protects her credit rating and maximizes her chances of repaying her deposit, because without this guarantee the repayment of her original investment would not be guaranteed.
Advice
- To learn more about real estate rescue, contact Real Estate Angels who specialize in this area.
- To sell the home quickly, lower the selling price significantly to attract a larger pool of buyers.
- Contact your bank to discuss options for renegotiating your mortgage.