Commercial Property Mortgage in arrers/possession:Hello. I co-own a commerical property with a colleague, each holding a 50% share via a Tenancy in Common. The property comprises 2 x commercial units currently un-let, and a small flat - but the property deeds are one entity for the whole building. The building is in negative equity. We do not have a co-ownership agreement. My colleague is in financial difficulty and will not make any more payments of the mortgage. I am in good financial health. My colleague and I have fallen out, so I have accepted I cannot get any agreement on any group decision going forward. My colleague lives in Ireland, whereas I emigrated a few years ago and have no plans to come back to live in Ireland. The property includes one residential unit where my colleague lives (rent free). Basically my colleague will just stay living there until they are forced out. As I understand it, my options are:a) go to court to get a court order so that the property gets sold - however its in negative equity so the issue arises as to how the mortgage provider releases the deeds. Also I believ this process could take circa 18 months.b) I too stop paying the mortgage and inform the mortgage provider accordingly that they can take the property as far as I'm concerned - but now how does the mortgage shortfall get resolved.I'd appreciate any guidance you can give me. I've never been in a position like this before and at a loss to understand how such an issue gets resolved in the real world or how the banks deal with these problems (the mortgage provider is National Irish Bank) Regards,
General web search, disucssion with close friends
1. You have to realise in this situation is that your downside risk is to have to pay the commercial mortgage back yourself in full. Under Irish law, there is no such thing as handing back the keys and then not having to pay the mortgage. The bank (NIB/Danske) can follow each of you individually for the full amount of the mortgage, including for any shortfall if the mortgage is sold. Accordingly, at this stage your best option is to seek the sale of the property (this will not take 18 months,more like six) or else to reach some agreement with your co-owner to buy out his share. Essentially, as long as the mortgage goes unpaid, your partner is really only increasing your potential loss, as the bank can look to whichever of you had money to pay the mortgage. The bank can get the full amount from one of you. IN the case where you are the financially solvent partner, this means that you are the person to whom the bank will look to, for recovery.
2. Be aware that any shortfall when the property is sold will continue to be recoverable from whichever of you is the solvent person. Accordingly, you don't have the option of handing back the keys and letting the bank take the property. You have to find some other way out of the conundrum.
Thanks for your comprehensive reply. Given that I'm oversees and I am the solvent partner, to what lengths can/will the mortgage provider go to to track me down and recoup their monies in another juristiction. I'm currently living in the UK. Could this aspect be used by me to try negotiate a settlement with the mortgage provider
Also, if myself and the mortgage provider fail to negotiate a settlement and the property gets repossessed how do they chase me for the shortfall - can they sell this debt to a debt collector registered to practice in the country I'm living in, i.e. here in the UK. Note I am advocating doing this, I'm just trying to get assess what factors there are to try negotiate a solution. Many Thanks.
3. The fact you live in the UK is not a bargaining chip. An Irish bank views a legal action for recovery in the UK as meat and drink. It would be different if you were living in Uzbekistan or somewhere like that. Secondly, debts are often sold to debt collector. It depends on whether the bank takes the view it can recover the money or not themselves and easily. However, Danske BAnk who own NIB have a hard assed view of debt recovery. They will first attempt to recover it. However, Danes are very pragmatic people. If they will get value from selling the debt they will do that. Of all the banks, they are one of the least user friendly and will not flinch from pursuing you. Remember, in Denmark they have one of the lowest delinquent rates of all.
Yep, just what i figured. Many thanks for your diligent replies. End of query
Barrister 17 years experience
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