Legal Position on my wife Mortgage

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milamber

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My name is (lets say Paul). I am married with two children in Dublin. I have a question for you. Very technical – so if it needs to be passed on – then do so – I just need the right advice for this.

I bought a house in 2001. I have paid the mortgage etc for the last 12 year. I have no debt. The mortgage is up to date and I have never defaulted on payment.

I married my wife in 2005.

In 2004 my wife father purchased an apartment for my wife in her name with him as the guarantor. This was for €312000 and she earned €17000.
We married 2005.
She stopped working in 2006 to look after our kids. She has no income. The apartment was rented out since 2004.

My father in law managed the property until 2009. I had no dealings with it until then.

I tried to make it work but the fact is that the mortgage is unsustainable. Further more is causes tax problems for me.

My father in law wanted me to remortgage over a longer period with my own house to cover his mistake. I refused.

He is unable to move the mortgage as he is 70 years old. The property makes a loss of 700pm rented out and about €1500 a month not rented out.
There are tax costs.

I wrote to the bank and revenue about the matter.

I told the bank that if they reduced the mortgage to 120k then the mortgage would be sustainable and I would look after it otherwise I think that its unsustainable and refuse to have anything to do with it.

They ran my father in law who is a company director. He went mad. We met – we differ on this matter because if the mortgage defaults his credit rating is gone. Not my issue.

The bank also only will deal with him as my name isn’t on the mortgage and he controls the loan and all the accounts relating to the apparment. I have no control here.

He is going to fill out form 11s and submit them on my behalf but expecting me to pay this bill.
Revenue will think that I submitted the forms and I will be linked to the mortgage. This is dangerous for my job.

I have considered separating my wifes and my taxes. As I see it – the apartment worth 140k has a mortgage of 220k. I simply put cannot take any responsibility for it. It was not my doing.

Can you tell me what happens in certain scenarios and what would be the best advice that you can give me.

1. What happens if my father in law dies – who inherits the debt / can I be affected?
2. How can I separate this issue from myself as the revenue don’t seem to understand that I have no access to running / costs / income of this?
3. What can I do to bring this issue to ahead considering that my father in law is paying the losses on the banks side but leaving taxes to me knowing that if I don’t pay taxes I go to jail not him. My wife also wont support me as she doesn’t want to affect her dad.
 
milamber said:
1. What happens if my father in law dies – who inherits the debt / can I be affected?
2. How can I separate this issue from myself as the revenue don’t seem to understand that I have no access to running / costs / income of this?
3. What can I do to bring this issue to ahead considering that my father in law is paying the losses on the banks side but leaving taxes to me knowing that if I don’t pay taxes I go to jail not him. My wife also wont support me as she doesn’t want to affect her dad.
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1. If the FIL dies then the apartment will have to be sold to pay back the mortgage, and the reminder will have to be paid from his estate.

Did he take out life cover for this mortgage?

I assume the mortgage and property are both in your wife's name only with FIL as guarantor.

What was the agreement between daugher and father?

2. In relation to revenue. It appears you are declaring the rental income on your tax returns? I presume that this is because it's your wife's property and her income? You say you have no access to income etc, but I presume the income is going to service the mortgage. And in your wife's name is it her income. And therefore her tax liability. You mention tax costs, but based on the losses you posted surely there is no tax, please clarify what you mean. It is not revenue's business to sort out the mess you/your wife/FIL have become involved in.

Who filled out the revenue rental income tax from 2004 to 2009?

Who is paying the shortfall of the rent to mortgage amount?

3. Looks like the problem is between father and daughter, but father and daugher want you to sort it out as seemingly neither of them can. Your wife has no income etc.

Is that mortgage of 312K the current amount owing?

Family Home

Looks like your wife did not contribute much if anything ever to this? So she presumably has no equity that a bank can go after? Plus you bought it many years before you met her.

Family relations

I realise this is a mess not of your making, but you have a wife and children and your wife has a father. In the interests of marital harmony 3 people need to sit down and see what can be done.

Will your wife inherit anything from her father?

If you are willing to take on 120K. Can the FIL afford to continue to pay 312- 120 = 192K
 
Reply

I will try to address everything brought up in the posts.

1st if the father in law dies - he owes more money on other properties and those losses would be realized. My guess is that he is trying to hope everything gets better and that the loans will be good over time. This probably wont happen.

The debt crucially is in my wife's name.

2nd he took life cover in my wife name on the mortgage yes.

In relation to revenue - first point - he didn't declare it to revenue until 2008 / 2009. I had a tax bill of 8k for years 2007 and 2008 as a result of 10k. This basically broke me.

In relation to tax - the following needs to be done each year. NPPR payments, Form 11 about €500 and now PRSI which will be 4% of income on the property - lets say €400. Property tax of €314 yearly and water charges shortly.

My father in law dodges tax.

Current amount owing on the property is €210000. Term 25 years left. I am 35.

My house owing is about €100000.

My wife never paid a penny towards my house or her appartment.
My father in law and myself no longer speak.

Very bad / dangerous situation.

Don't know what to say.
 
I'm confused. Why is your wife not (seemingly) engaged in this whole process?

The mortgage is in her name, the bank won't deal with you but only with the guarantor, why aren't they dealing with your wife?
 
milamber said:
2nd he took life cover in my wife name on the mortgage yes.

In relation to revenue - first point - he didn't declare it to revenue until 2008 / 2009. I had a tax bill of 8k for years 2007 and 2008 as a result of 10k. This basically broke me.

Current amount owing on the property is €210000. Term 25 years left. I am 35.

My house owing is about €100000.

.
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Yes your situation is a mess but I wouldn't say bad or dangerous. Actually you don't owe the mortgage so you could actually walk away but then you know that could rock your marriage.

You still have not said what was the arrangement between father and daugher when the initial purchase was made. The reason for the question is my advice on what to do will be based partly on this.

Based on the new details you've posted. If your FIL dies, he owes so much that he cannot pay all his debts, is that correct? Then the bank will go after your wife, but she too owns nothing and has no assets so they cannot get anything off her. They cannot put a judgment mortgage on your house as she doesn't own it. If she were to die then the problem is solved because the life insurance is in her name. Just shows you that both the borrower and the guarantor should have life insurance.

In relation to tax returns. Your post doesn't make sense. Is this true, in 2008 your FIL made tax returns going back to 2004. There was zero tax for the years 2004 to 2007. There was a tax bill for 2008 of 8K and for 2009 of 10K is that correct.

Who did out the tax returns was it an accountant. I am very surprised there is any tax bill, UNLESS, the property was not PRTB registered? And that came in in 2006? Can you please clarify.

It's very important to understand that as the property is in your wife's name she is liable for the income tax on it. And it's an even further mess because it looks like the FIL is 'subsidising' the mortgage. In a court of law that might be seen to be him acquiring equity - that's too complex for someone like me to go into here. And furthermore it might have implications it it was construed as a 'gift' by revenue.
 
To clarify. My wife got the mortgage because her Dad was on first name terms with the bank. He guaranteed her mortgage in 2004. He then fitted out the appartment and rented it out fitted it out for her. She never lived there.

She on her own admission doesn't want to know about the mortgage and backs her Dad who wants me to remortgage my property to pay for their mistake.

In 2009 - i suggested that the apartment be sold. I had a big argument about this. He having control over the bank etc would not allow me to sell it. It then went into massive negative equity.

Apparently now I have to pay for the mess. He has told her also that he cannot sort it out. She backs her father.

My marriage is got a point of no talking now.

Your are correct about taxes - he decided not to pay tax or inform revenue that it was rented out from 2004 to 2007. in late 2008 he registered it for 2007 onwards leaving me to fill out form 11s for years 2007 and 2008 which I had to pay. the bills were €3519 and €3943

When my father in law dies - the bank will pursue my wife and because she has no income - they will go after me at that point. I wrote to the bank stating that I would not pay for this and further more any deals done by my father and my wife I would not honour. (not my mess)
 
This type of case is usually clouded by emotions and intra family relationship complexities. Sometimes the facts can become fuzzy.

The apartment is owned by your wife. She is responsible for it. Not your father in law and Not you. Your wife has no income so the only thing she can do on her own is surrender the apartment to the bank. If she does that the bank will call on your father in law as Guarantor. This is probably the best way out of this. The choice here is for either your FIL or YOU to take the hit.

The approach that i would take in your shoes is to come to a compromise with your FIL and suggest that the apartment should be surrendered to the bank and that the negative equity portion should be shared equally
between the FIL (her father) and you (her husband) Once the property has been surrendered, the tax issues will also disappear and you can draw a line under the episode.

You could of course stick to your guns and claim that you had nothing to do with it, " before your time" blah blah blah, but I really dont see how you can get away with that. The Debtor in this case is your wife who has no income, mainly because she stays at home all day to mind your kids.

Legally you can get out of this scott free, but probably not with your relationships intact

Maybe the FIL is thinking that its only fair that you pay the taxes if he is absorbing the mortgage loss. I could understand that way of thinking also.Your Father in law is helping his daughter and wants to see you do your part, helping your wife
 
Reply

I hear what you are saying about my father in law. We no longer talk. I did suggest this in July 2012 about handing back the keys etc but he will not. the reason he will not is because he is a company director of his own company. he has lots of staff. If I default on the mortgage - it affects his credit rating and it will also affect his companys credit rating and could have problems for his company. therefore - he is making small payments to the mortgage to keep it alive and the same with his other investment mistakes. his problem now is that they are all variable rate mortgages and are breaking him. he therefore wants to keep everything going by paying for bits a pieces and hope everything gets better. the only deal he is willing do with the bank is to guarantee the property against me and not him and by extending my mortgage was suggested. (i was good during the boom).


My wife and me no longer talk and it is a very messy relationship now.

The fact of the matter further is that we almost divorced already and he sent his workers to change the locks at my house but he was unable to under law and we live there unhappily together.

Very messy situation.
 
milamber said:
Your are correct about taxes - he decided not to pay tax or inform revenue that it was rented out from 2004 to 2007. in late 2008 he registered it for 2007 onwards leaving me to fill out form 11s for years 2007 and 2008 which I had to pay. the bills were €3519 and €3943
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It is amazing too me how your wife whose property it is and whose tax liability it is has apparently nothing to do with cleaning up the mess.

If we go back to the beginning your FIL for some reason went guarantor on a mortgage of 18 times your wife's income. That has got to be about the worst we've come accross.

Now you say no tax returns have been done from 2004 to 2007. I am assuming you mean registered for tax. Is the property PRTB registered?

I wonder would the bank write down the mortgage to the 120K you suggested, and let the FIL (who is in debt) and daughter (who has no income) off. A hit to the bank of 80K but not a hit of 200K.
 
Dr.Debt said:
Legally you can get out of this scott free, but probably not with your relationships intact

Maybe the FIL is thinking that its only fair that you pay the taxes if he is absorbing the mortgage loss. I could understand that way of thinking also.Your Father in law is helping his daughter and wants to see you do your part, helping your wife
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Normally I'd agree with you, but OP had nothing to do with original mortgage, original mortgage was just about the craziest investment decision ever, wife has had no hand act or part in purchase, renting, tax returns and is now not talking to husband because of a mess she and the FIL got into. We also now have the issue of divorce, why would OP get involved in this at all. Plus he doesn't even own the property.

And I totally disagree with you that the FIL is helping the DD. Looks to me that a man well experienced with the business world got his daugher into a riduculous investment. Looks to me like he controlled the whole thing from start to finish. So he should deal with the fall out. DD cannot do anything as she has no money, doesn't deal with the rental, doesn't do the tax returns and doesn't pay the taxes, nor the cost of the mortgage shortfall. It would be wonderful to live in a world where you do nothing but gain an asset.
 
Reply

I was trying to work out with DIL and OP mean but I guessed it.

Ok

My wife was from a wealth backround - she never bought her cars or anything. It is also true that her father handed on a plate everything she has. She would never pay a bill or deal with people in general and hates confrontation except she is well able to confront me. Therefore she avoids ringing banks or taking any responsibilty. The reason is because she never had to do anything like this in the past and won't in the future.

In relation to the private residents tenanacy borard - it was not registered before they year 2007.

In relation to divorce - very messy. I can actually lose here. Although I dont drink or do drug or even go out very often - she will probably get ownership of my house in a divorce because we have two kids. Also she will probably get to stay in the house until my kids reach 18 or in the case they go to college - after they finish college (possibly aged 24). This is 20 years away.

After the kids leave the house at age 24 - then the assets are split - financially devastating me then. I fortunately have a few cards too - so they are not too quick to divorce me yet.
 
milamber said:
I was trying to work out with DIL and OP mean but I guessed it.

.
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Sorry I made a mistake. It's not DIL - daugher in law it's DD Dear daughter. and OP is you the original poster. Also the SIL - son in law. I forget sometimes that people don't know what we mean, it's just to avoid too much typing.
 
It's all a big mess BUT your father in law and wife want you to remortgage your house to pay down the other loan, I would imagine that one can be sorted pretty quickly as I can't see any bank is going to give you that mortgage. Equity releases like that are pretty much gone to the best of my knowledge so maybe you should ask your bank about this loan and they will more than likely refuse you and you can produce your letter of refusal to FIL & wife. You will have tried what they asked, what more can you do!
 
Very messy at this point - I don't quite know what to do but i am thinking of handing over my father in laws tax affairs to revenue as it is getting bitter.
 
It is bizarre that both the father and husband infantilises a grown woman in this way.

I don't see how handing over your FILs tax details to Revenue will help this matter at all. Relationships seem to be beyond repair. Stop engaging for a while and figure out how you are going to extradite yourself from this marriage.

The apartment has nothing to do with you. Let your wife and her father sort it out.
 
I wish you were right

Hi Sarah,

I wish you were right. I was concerned about this mortgage taken out on the apartment so I contacted the bank involved - AIB.

At first AIB won't deal with me as I am not on the mortgage.

I wrote AIB a five page document on the matter and sent it in April 2012 to them.

AIBs position is this. Basically my wife is liable for the mortgage and if the guarantor isn't in a position to cover the loan - then they will pursue her for the outstanding loan.

I know this because after badgering AIBs loan department - Coolean K lets say. She said that they didn't have to talk to me. I sent them a registered letter explaining.

I got a phone call - not a letter - from Andrew in AIB legal who pointed out that as my wife husband - if my FIL cannot or isn't in a position to cover the loan - I would be pursued for the remained as I am married to her.

I think at this point it would get legal and I have no idea how it would work out in court. My position is this. That may happen in a few years. I want the issue dealt with now.

My wife isn't too bothered about finance or this. She gets money from Dad even at 31 and goes out regularly. I on the other hand have no money and go from month to month being broke. I have to carefully calculate everything I spend down to a chocolate bar for my kids treat - terrible stuff.
 
OK, the 1st thing you need to look at is the basis on which you are assessed for tax. Most couples are jointly assessed, particularly in cases where there is only one income in the household. You should know that you also have an option to be SEPARATELY assessed for tax.In this situation each spouse is taxed on their affairs separately. If you elect to be SEPARATELY assessed for tax, then any property tax or tax issues relating to the apartment are your wife's problem alone. This is the easiest way of detaching yourself from the apartment tax issues. If anyone is going to jail for not paying tax on the apartment, it will be your wife.

If you decide to divorce then you're right when you say that your wife is likely to be awarded possession of the house until the children come of age.You will have to start thinking about this and making some plans for future housing arrangements.

If your father in law dies, there may be a life assurance on his life in respect of the apartment borrowing. Are you aware of such ?
If no life assurance, the bank, in the event of default will pursue your wife for the shortfall and depending on the Guarantor wording may also be able to claim against your FILs estate.

You mention in your post that you have been writing to AIB about the mortgage on the apartment. My advice to you is to keep well away from any contact with AIB. Its nothing to do with you. Even in the future if you are writing letters to AIB on behalf of your wife, make sure your wife's name appears at the bottom of the page. Getting involved like that is exactly what the bank would like. The bank has already mentioned to you on the phone that you (as the Debtor's wife) would also be "pursued" in the event of default. That is of course complete nonsense.
 
Thanks Dr. Debt

Thanks Dr. Debt for your reply. Interesting.

First off - the life assurance I think is in my wife name - not my father in laws name - not sure of the relevance of this.
Second - I asked revenue to assess each of us separately already. this was done already. She is getting letters directly to her name about the local property tax and so on so forth.

Third - and I hate to admit your right - my wife will be given my house even thought she never paid a cent towards it. Nothing. Never paid for groceries or bills anything. I will however fight this if it comes about in every court to the supreme court as I feel this to be unjust. Also as a result of this - I would be unable to get a new mortgage given the fact that I would be legally obliged to pay everything to her anyway.

My father in laws estate is likely to be pursued not just on one property bad decision but many (to the same bank) - it is unlikely that the losses can be covered by his estate and it is likely that the bank will pursue my wife at that stage. Question is can and if my wife can legally put my house as a guarantor etc. What will she do?

I wrote to AIB to clarify the position. They seem to have already answered this now. They are - if I don't mind saying it very sneaky about how they are going about their business. I also wanted to have it in writing that I offered them a solution but they didn't accept. To date - they will not send any written reply only a phone call.
 
If your wife gets custody of the children, then of course she gets the house. You have a responsibility to put a roof over your childrens heads, no matter what happens between you and your wife.

ETA, it's impossible to be sure, but it sounds like your wifes families money may come from a house of cards...
 
No point in fighting your wife's possession of the house.

The court will conclude that your wife has an interest in it by virtue of all the "unpaid" work she has done in the home and looking after the children. They will also be keen to
ensure that the children have a roof over their heads.
 
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