Limitations Act & Charges

[Neeruam]

I bought a house thru a bank 19 yrs ago, only have an original letter offering the loan/mortgage with details to follow.. Not paid anything or heard from the bank since(Strange but true) anyway can only assume they bought the house etc and then lost the file. So given I will have to write to them, as I believe they will have to come up with the original terms, as if Im right, this is a requirement of the properties act.this then leads to the limitations act ie over 12 years etc, their is also the standard 1st charge, I know the charge stays in place, but can the bank come at me for the money via the charge or do they have to wait until I sell the property and would it revolve around the original loan amount. I would like to know some idea of their legal position, any ideas?

[factor-fiction]

Maybe I've misunderstood. Are you saying you bought a house 19 years ago using a mortgage but the lender has never asked for any repayments?

[Neeruam]

Correct, could be mortgage or loan

[Valmave]

It would seem a good idea to apply for an Official Copy of the register of the property from the Land Registry (assuming of course that it is registered) to establish some sort of starting point.

[Neeruam]

Hi V. Have done that its registered in my name, and I have a copy of the charge, so my end looks ok, its when I wake the bank up that I may have to rely on lim act etc. Of course their might be a measure of negligence or at least embarrassment on the banks part , and they could just forget it and send me the deeds etc but I wont know till I light the blue touch paper, when I write to them.

[buildersmate]

The deeds are irrelevant. What's relevant is that, if the 1st Charge is still sitting there on the Land Registry record of your property, you won't be able to sell it because the buyer's solicitor will spot this and ensure the 1st Charge gets resolved. The LR will not allow any new owner to transact a land registry transfer document if there is a 1st Charge outstanding - which is why your buyer will inevitably spot it (as he wouldn't be able to register the land).

I'm not sure the limitations acts are relevant here - the organisation holding the 1st Charge on your property have clearly messed up by not charging you interest on the loan you took out - but I don't see how think that forces them to cancel the 1st Charge - it will merely alert them to their failure.

I'd be resolving this before you decide to sell - it could seriously hold-up any sale process, whilst you and the loan company argued about it - with them holding the upper hand - the power of delay, whilst your buyer goes elsewhere.

[factor-fiction]

Although they haven't charged interest if the original agreement was that you would repay the capital after say 20 years then maybe the debt still stands

[buildersmate]

Yes, that's what I think, FF

[factor-fiction]

Hi buildersmate- yours wasn't there when I started typing. Yes, it's like a loan at 0% interest

[DangerUXD]

once the lender is aware they'll add and compound the original interest which will probably then be a lot more than the value. As this is a charge that won't go away without the lenders cooperation this will need to be resolved if you are going to sell it.

[Neeruam]

Thanx people, got all that,....but, the point is the deal originally was a mortgage with specific terms and conditions, which because I have no copy thereof, I am assuming that once I see them they will be out of time re the Lim act, so if succesful that nullifies that bit, but as we all agree the 1st charge still exists, which flags up the debt, and as has been said will still need to be paid off.so you could say well whats the point of the lim act if it doesnt cover the charge, well because theirs 2 legal entities ie the mort and then the charge, the point I would like some input on is if I dont sell the house, do it up and rent it out etc where does the charge stand can they come at me via the charge prior to a sale of the property or does the charge become "dormant" until the prop is sold ?,

[DangerUXD]

The limitations apply to debts that go unacknowledged or pesrued for a certain period, 6 years I think. However that is not the case here the charge on the property is a permanent registry of interest so forget that. Now normally a charge alone cannot force a sale however if there are arrears that can be shown then reposession in the normal way can occur. This may well be some sort of adminstrative error that will get realised when you start shaking things up with enquiries. I am frankly amazed that you have not been paying the mortgage for 19 years, you must have known this would blight the situation later. The absence of your own documentation relating to this has no relevance, once aware the original lender will apply the original terms and conditions of the mortgage. Bascially this property is effectively worthless until this is resolved. If the lender wakes up and eventually they will, you'll get a demand for arrears.

[DangerUXD]

The T&C's or a mortage are for the life of that mortgage, they don't go out of date.

[Neeruam]

Hi D, I see what your saying...... The lim act on property and land is 12 years...
I believe that although the charge has been on the prop since the word go, it does not go before the original terms and conditions on the mortgage deal, so the point that although it can be found it does not in itself stop an out of time action on the original deal. yeh, their seems to be grey areas with the law ie mistake, human error that may act as a defence to such an action. but I am trying to keep it simple at this stage!! as you say if arrears, defaults etc can be shown..... that kicks off the bank chasing the debt as we see in most repo cases, I think the point with the lim act action in this case , would be to nullify that as no action has taken place so their are no arrears in the legal sense. this covers the point you make about the bank reverting to the original terms & conditions and starting a chase. thats how I see the importance of the lim act cutting off that avenue.....that then leads to the charge and again as you say their has to be arrears etc before it kicks in which I am hoping that their would not be any as a result of the lim action. so its what power does the charge have other than to let the world know the debt exists, and that it needs to be paid off, hopefully not until I decide to sell in other words does it allow the bank to enforce a sale hopefully not!!!!, their are side issues given to the whole situation, maybe I could reduce the amount owed if the bank came up with a figure at any stage,centred around their negligence, just a thought!!!

[DangerUXD]

"lim act on property and land is 12 years" - yes but your situation is not such a situation. This act is for land/property that has been tended and adopted by someone other than the owner and the true owner has said nothing for 12 years, then the non owner may claim it within certain rules. You are the owner of the property not the lender so forget that. Your name is on the land reg entry yes? (deeds are irrelevant) So what is left? The lender has T&C's and will apply them once the administration kicks in. Forget the whole LIM thing this is not applicable here.

[buildersmate]

Yep, I reckon that Danger has this sussed - it's the same response as you'd get from me. It's fair enough, though, if you are using this to practice your arguments for a showdown with the lender, but I still think you won't win this one.

If they simply see, 'look you still owe us the principal sum plus xyz interest and we aren't going to agree to removing the 1st Charge until you pay us what you owe' it is going to force you into a position of taking legal action against them to get the 1st Charge removed. Otherwise you are stuffed anyway. It's all about where the negotiating power lies. That's why you should start this process now - not when you want to sell up. That way, at least they don't have a timescale lever over you.

The best you can hope for (I reckon) is that they agree to write off all the accrued interest to date - leaving the capital sum outstanding - which you will have saved for over these 19 years, of course, from the money you haven't had to pay them? I can just see them saying that to you.

Nice to have a decent question to debate in this section, BTW, instead of the usual nonsense that permeates into here and which is basically nothing more than 'Chatterbank with a financial context to it'.

[THECORBYLOON]

I am no expert but this may be of some interest, http://www.newlawjournal.co.uk/nlj/content/watching-clock

[Neeruam]

Thanx for your input D, B and Corby.,Danger, Where did you get that bit about the land being tended and the prop occupied, are you saying the occupation, if left alone ,no contact etc leads to the occupants claiming the house via the lim act, and that is the scenario that would need to occur for the lim act to kick in against me as the owner? without looking at it closer I suppose that might have occurred along the line, maybe ive got this round my neck, but looking at the lim act this situation still seems a straight argue between me and the bank. ie the 6 year rule for credit cards, (say) is basically a loan governed by initial T & Cs the money then made available, charged out at top rate to cover the no security risk, and profit, and if they dont chase you for 6 years plus its squashed as I understand it. now in my case to a point its the same scenario, difference being their is an asset, which is the focal point of the loan and the t & cs are more involved, so they make it 12 years. so if the bank finds its paperwork writes to me demanding the money, I say sorry 19 yr lapse.. and the rest we know....? Then we land at the charge, and what Im getting at is if I dont want to sell the house, but put money into it rent it out I almost dont mind them having the charge, so long as they cant use it to repo the house. In advance of me getting in a financial position to settle it.or at least an offer to clear it.

[Flyhalf]

If I read it correctly (and my knowledge of statute lies in another area), the lender can't claim anything.
The official version is here:
http://www.bailii.org/ew/cases/EWCA/Civ/2008/55.html

[buildersmate]

Nee - you maybe misunderstand what a charge does. It doesn't automatically entitle the holder of the charge to demand repossession, it does entitle it to repayment of its loan once the property is sold.

However Flyhalf's link looks interesting and I stand corrected as it seems you MAY be onto a winner. The case Flyhalf highlights was a legal second charge - a loan taken out against the surity of the property, where having taken the loan it looks like the lender made the same mistake as your lender and the court found in his favour. But the devil is in the detail and I suspect you are going to have to get proper paid-for legal advice on this before you are home and dry.

You also need to look at paragraph 17 in this reporting of the judgement - it makes the point that not all mortgagees acquire the immediate right to possession at the date of mortgage (and which in this case it seems the judge found that adverse possession by the mortgagee was demonstrated.

Good luck - this has gone out of my knowledge base now.

[jeanijay]

Can you steal a house through default?