Property law question...

[GliderPoss]

Hey PS peeps,

Got a random question property law conundrum for you all on behalf of a friend (this isn't about me!). I cannot seem to find anything definitive online about this.

Please bear in mind this is set in Australia.

A guy & girl are engaged (together 8 years) but do not marry. They are both on the mortgage papers for a house but only she is listed on the title deed. They split. She keeps everything, remarries soon after and no contact between them for around 5 years.

The guy then recently applies for a loan for a new house and gets knocked back as the bank says he is still on the mortgage for the old one! He is totally gobsmacked, assumed (stupidly) she had taken him off the mortgage when she re-partnered. He never contributed to the mortgage - was only listed to help her get it in the first place (improve criteria).

She is now refusing to remove him from the papers and is chasing him for $AU50K + in "back pay" for the mortgage. He doesn't see WHY he should pay this? He says the lawyers tell him he cannot FORCE her to remove him from the mortgage papers even though they have absolutely nothing to do with each other anymore. How is this possible? Can anyone help explain this & offer a solution? I feel like there must be a statute of limitation on claims surely... this is essentially blackmail.

 

[marymm]

By "chasing him for $AU50K+ for the mortgage," do you mean she has sued him in a court of law? If so, the court papers should state the law/statute/contract basis on which she is suing.

Two people on the same mortgage usually mean each is individually liable for the entire debt to the mortgage holder (not each other). It is quite strange that she is the only one listed on the title deed, usually it would list both names as joint tenants or tenants in common. Perhaps he was only a co-signor (like a guarantor) on the mortgage, meaning he would be liable for the debt should she fail to pay but had no ownership rights to the property.

It is doubtful the mortgage document gives her the right to ask for money from him; the document likely only requires him to pay the mortgage bill to the mortgage holder should she default.

Presumably she has been making payments as the only one on the title deed. If she were to default on the mortgage, and your friend failed to bring the account current, the bank would foreclose on the property ... and look to both of them if they did not collect all that is due under the mortgage. Both people's credit would be adversely affected.

The existing joint mortgage is based upon the income of both people; having her remove him makes her the sole name on the mortgage. Possibly she cannot demonstrate affordability for a new mortgage in just her name (and/or with her new partner). Possibly she does not want the expense and bother of having to go through the whole process of changing from a joint mortgage to a single name mortgage.

If she has not filed a court action, and the mortgage document does not contain a provision requiring him to make payment to her, perhaps your friend would like to offer her $5,000 (or something reasonable) towards the cost and inconvenience of transferring the mortgage from joint to sole ... to be paid after the mortgage has been transferred.

 

[maryjane04]

I think this happened to my friend's partner. It is actually the bank's fault that they didn't put his name on the deed and therefore they should be able to remove him from the mortgages/loans. I would speak to the bank first as they are usually pretty understanding.

 

[GliderPoss]

She has not sued him in Court, they are fighting it out via lawyers (his mum is a lawyer) at this point. The Ex can easily afford the new mortgage and in fact interest rates have dropped so it's beneficial to do so. I gather she is using this chance to be vindictive towards him. Obviously I don't have all the facts but he did say the breakup wasn't amicable but no fault either side (ie. no infidelity) hence why he is baffled by her making this difficult. In Australia you cannot remove either party from the mortgage without permission so she needs to consent to removing him even if he is willing to do so!

 

[Karl_K]

"It depends" is the only possible answer.

 

[seaurchin]

Maybe she'd have to pay hefty refinancing costs and that's the reason or maybe her financial situation has changed and she wouldn't qualify for the mortgage on her own. Who knows, but it doesn't sound like it would make much sense for her to want to be vindictive to him when she's moved on enough to be married to someone else.

But if his name is on the mortgage, then I guess that means it's his house too.

Therefore, he should just load up his stuff and move back into the house with her and her new husband. Just be all nice and settled in by the time they get home from work. I bet she will sign him off the mortgage then.

 

[Bron357]

OK.
Firstly he is remiss not sorting this out when they split.
He needs a solicitor to sort this out now.
If they co habitated for 8 years, de facto rules apply. Assets acquired during the relationship can be deemed 50/50. Even though only her name was on the Deed by being on the mortgage he can “claim” half value of the House.
His solicitor can tell her Solicitor that if she wants him to be “half responsible for the mortgage” he is more than happy to claim “half ownership value” of the property.
It cuts both ways!
she might be very sorry she wasn’t more gracious.

 

[GliderPoss]

Thanks everyone, very helpful points! I suspect there must be more to this than he is letting on else I fail to see how the law would compel him to pay her. I’ll keep sussing it out further...

 

[jordyonbass]

Sounds like a civil matter and not one that the courts will want to deal with too much by the sounds of it.

If it were me then I'd agree to it on the provision that my name is on the title as well for 50% ownership. That should scare her off.