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Posted - 04 February 2014 :  01:01:09  Show Profile

I own a property in Nottingham, England. I have owned this property since November 2005 and have never missed a payment or defaulted on the mortgage before. I left the UK in August 2010 and have lived in British Columbia, Canada with my common law wife since.

During this time I have attempted to rent out the property will little success. The rent I could make was approximately half the mortgage and the tenants we had in there defaulted on rent and/or damaged the property resulting in several refurbishments and repairs.
Eventually we put it on the market for sale in December 2012. Since then, and having to lower the price on 4 separate occasions due to lack of interest, I have had it on the market for 15,000 pounds lower than the mortgage value.

In over 12 months, I have had one singe offer of 66,500 (which was 16,000 below the mortgage on the property).

I called my lender (NRAM) to ask them to grant my application for a shortfall sale. They required an income and expenditure statement from me, plus lots of other supporting bank statements etc. I also included two hardship letters explaining the situation. My partner's income has dropped considerably due to illness (she is self-employed), leaving my wage only to service our most of our bills and my debts.

I never heard back from NRAM in over six weeks, and during that time, the one and only buyer we had pulled out of the deal.

When this buyer had the survey done, it revealed potential structural issues and many essential and cosmetic repairs. The surveyor who did this Homebuyers survey recommended 126,000 pounds of repairs!

I have now defaulted on my mortgage for 2 months now. I want to Voluntary Surrender the property as it is in negative equity with no sign or recovery. After speaking with NRAM they will not agree to a shortfall sale, they will not agree to a sale at auction either.

My estate agent has advised that I will now only sell to an investor or auction house due to the state of the property. They advise I am unlikely to sell to a private buyer due to the state of the property, which will only likely deteriorate due to it being vacant for many months.

I have the forms from NRAM for Voluntary Surrender. Before I sign them and send them back, can you get me some legal advice from one of your experts? I am concerned about the wording and clauses on the form NRAM have sent me. I don't want to sign something that I would be legally liable for, but I also understand that some of these things are standard and unavoidable.

I have spoken at length with a friend who has been through this with NRAM as well as the helpful folks at the National Debtline. I am pretty clear on the process and what they can and can't do, as well as what they are likely to do. However, I have also read a lot of information on forums and websites on the internet advising not to sign the Voluntary Surrender forms if they include a "Deed of Acknowledgement". Can you possibly get me some advice on this? I have no problem surrendering the property, but NRAM told me they would only accept his form signed and unaltered as the way of doing it.

Ive been advised I have to sign the forms if I want to surrender, that it's a standard procedure and that some of the clauses aren't enforceable anyway, its just scaremongering.
I read somewhere that the very worst case scenario is that NRAM could ultimately, down the line, force bankruptcy proceedings on me, which again, ultimately would be enforceable over here in Canada where I live. I'm told this is unlikely to happen, but is technically possible. Does signing this form from NRAM make me still liable for any shortfall should bankruptcy occur?

Lots of questions for you, I know. I really appreciate any help and advice you can get for me. Your service has been invaluable to date in this very stressful and difficult time.
Here is what the forms from NRAM look like so that the expert can look over them and advise:

I/We voluntarily surrender possession of the above mentioned property to you and agree to the sale of the property.

The proceeds of the sale will be applied to the account to pay off in whole or in part the balance outstanding. Any surplus funds will be used to reduce the outstanding unsecured loan balance.

I/We understand that should the sale proceeds be insufficient to pay off the total amount outstanding, you and/or any insurer providing Mortgage Indemnity Cover (if appropriate) reserve the right to pursue me to recover the shortfall.

If you have any unsecured balances with us, in the event that the proceeds of sale of our mortgaged property, after deduction of the costs of sale and associated expenses, exceed the amount of the secured element of my/our loan, then I/we hereby confirm that those excess monies may be applied in reduction of my/our unsecured borrowing. I/We understand that the foregoing is subject to any third party charges there may be against the property or I/We becoming bankrupt or entering into a formal agreement with creditors prior to completion of the sale of the property and application of the proceeds of sale.

If your account is in arrears or arrears accrue and the forms are not returned in 7 days we will proceed with appropriate action to take possession of the property.

On receipt of the completed declaration we will arrange to take possession, if the property has communal door access, please supply the keys.

If you have any internal keys and an alarm code can you please place these in an envelope addressed to ourselves and leave in the property.
In addition, I/we note that you are at liberty to remove any items or a personal or household nature remaining in the property after the date of my/our giving possession.

Thank you for your advice in advance!

Amy Jellings
Debt Diva Expert

110 Posts

Posted - 04 February 2014 :  09:53:27  Show Profile
Welcome to the forum wednesdaymatt. I'm sorry that you're experiencing this difficulty at the moment.

I'm afraid that we cannot offer you legal advice. None of us are legally trained, qualified or regulated to do so. Given the sums of money involved I would encourage you to take some personalised legal advice so that you know exactly where you stand.

I too am aware of the possible pitfalls of signing such an agreement and how it might affect your rights, post-bankruptcy for example. I think it would be extremely risky to rely on clauses that you sign turning out to be unenforceable.

Here's one viewpoint covering the scenario that you choose to become bankrupt in the future, or that bankruptcy is forced upon you by a creditor. The word "sinister" is used...

Amy Jellings
Bright Oak
Debt Advice & Debt Management
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