a bank waiver for a developers mortgaged land

[cliffyamo]

Dear Nigel,
To use a quote from yourself previously;
Quote
"It is perfectly legal, in certain circumstances, for a developer to mortgage the land on which he's built even though part of the project may have been sold - and paid for in full. Although you have the right of Specific Performance, you cannot claim this right until Title Deeds have been issued. And the Title Deeds will not be issued until the debt has been cleared because the bank has a claim against them. "

would a bank waiver offered by the Developer offer some sort of protection regarding this situation?

quote;
"There's no way that you can clear anyone else's mortgage without their agreement. So basically you're stuffed - even if you wanted to pay off the developers mortgage you couldn't."

I was of the assumption that if a Bank foreclosed on the Developers Mortgage/Loan that the Bank would consider the owners of the Properties possibly clubbing together to clear the loan if their was a real risk of losing everything including their Properties and the Loan obviously wasnt a huge amount of money?

Quote
"And if you have bought a property built on mortgaged land, there is absolutely no 'incentive' for the developer to pay off the loan. You have paid him all the money, so why should he care? He has your money - he has nothing to lose if the bank forecloses - it's only those who have bought property on mortgage land who face the prospect of losing their homes.
So although you may have some so-called rights because your contract of sale was deposited at the Land Registry for Specific Performance, exercising those so-called rights is often impossible. "

Is a written Bank Waiver from the Developer to clear the Mortgage when the Title Deeds become available from the Land Registry worth the paper it is written on?

[Nigel Howarth]

would a bank waiver offered by the Developer offer some sort of protection regarding this situation?

It’s the bank that provides the waiver, not the developer. And the bank would not issue a waiver if the developer had mortgaged the property to that bank.

I was of the assumption that if a Bank foreclosed on the Developers Mortgage/Loan that the Bank would consider the owners of the Properties possibly clubbing together to clear the loan if their was a real risk of losing everything including their Properties and the Loan obviously wasnt a huge amount of money

In the general run of things you can’t pay off someone else’s mortgage without their permission. You may be able to take legal action against them but you’d need to take legal opinion to see if you could go down this route. If you could bring a case and you were successful, the court could order the developer to issue Title Deeds within a specified time period (and would therefore require him to clear the mortgage). If the developer failed to carry out the court’s instruction, he could be jailed. It would take a couple of years for the court to reach a decision – possibly longer if the developer contested the case.

But in the case where a bank forecloses on the loan, you could negotiate with the bank to pay off the loan.

If the developer went into receivership, the receiver would act in place of the developer. You could then negotiate with him/her to clear the debt.

Is a written Bank Waiver from the Developer to clear the Mortgage when the Title Deeds become available from the Land Registry worth the paper it is written on?

It’s the bank that issues the waiver, not the developer. And the bank would not issue a waiver if the developer had mortgaged the property to that bank. A bank waiver issued by a developer is worthless.

Regards,

[cliffyamo]

quote] "the bank would not issue a waiver if the developer had mortgaged the property to that bank."

Nigel,
My Solicitor has found that when we did a search on the whole Plot, that the Land was Mortgaged after the Properties were built, sold and paid for.
Its the whole Plot of Land with seven Houses on which is Mortgaged.

quote] "It’s the bank that issues the waiver, not the developer. And the bank would not issue a waiver if the developer had mortgaged the property to that bank. A bank waiver issued by a developer is worthless."

The Developer is offering a bank Waiver, (presumably issued by the bank which had agreed to the Mortgage on the whole Plot of Land) offering my portion of land that my Property sits on a waiver, that when the Title Deeds become available I will be able to receive the Title Deeds?
As long as this is issued from the bank that has arranged the Mortgage on the whole Plot would this then offer some kind of protection?

[Nigel Howarth]

The Developer is offering a bank Waiver, (presumably issued by the bank which had agreed to the Mortgage on the whole Plot of Land) offering my portion of land that my Property sits on a waiver, that when the Title Deeds become available I will be able to receive the Title Deeds?

As long as this is issued from the bank that has arranged the Mortgage on the whole Plot would this then offer some kind of protection?

Yes, you're OK. If the bank is offering a waiver on the land your property's built on you will be able to get the Title Deeds.

It sounds to me as if someone at the bank made a mistake when they granted the developer a mortgage. As all the properties built on the land had been sold, their buyers' claims to ownership would take precedence over the bank's claim. So the bank couldn't take the land if the developer defaulted.

It wouldn't be the Alpha Bank by any chance?

Regards,