Removal as guarantor from ex's home loan

S

smXXXX

Hi, About 18 months ago, my partner and I separated. At the time I was guarantor on a loan for her investment property which she has now moved in to. In the last 6 months I have been trying to get her to fill out a variation of loan form so I can ascertain what it will cost to remove me from her loan. Currently the loan is fixed and expires in November 2012. I have asked mutual friends to help, plus enlist my lawyer to persuade her to fill out the form, but she refuses to do so. My lawyer has indicated she is unable to force her to fill out the form.

I have also contacted RHG Home Loans who hold the loan and they indicated they are unable to do anything until they receive my ex's signature. In addition, when the loan was first taken out, it was with RAMS but now it is with RHG Home Loans. On the original documentation from RAMS, I am listed as guarantor but with RHG I am listed as a co-borrower. As far as I am concerned I should still be a guarantor and have not signed anything to say I was a co-borrower. Again, when I contacted RHG about this, I am not able to do anything on the loan without my ex's signature to do so, and it is apparent that will not happen.

So I am wondering what other avenues are open to me? Any suggestions will be greatly appreciated.
 
that sucks. I wonder if you can place a caveat on the propertyas you woul dhave a direct interest in it shoudl it go up for sale. that may spook her into releasing you?
 
Is there enough value in the property for her to be able to release you? For her to hold the loan in her own name with no guarantee?
 
wylie said:
Is there enough value in the property for her to be able to release you? For her to hold the loan in her own name with no guarantee?
Click to expand...

Thanks for the reply. The loan is for about $83k (still owning) and at the last evaluation, the property was worth between $220-$240k. I'm not sure how to go about getting her to release me...
 
Ausprop said:
that sucks. I wonder if you can place a caveat on the propertyas you woul dhave a direct interest in it shoudl it go up for sale. that may spook her into releasing you?
Click to expand...

Its a possibility I suppose, I wonder if I can arrange this through RHG...
 
Hi,
The loan was to pay out her ex-husband his share in the house when they divorced. As she demonstrated she could repay the loan by herself, the guarantee was for surety.
 
In that case she'll need to have enough equity in the property to be able to remove your guarantee. I can't think of a way to force her to do it though. It's likely one you'll have to negotiate your way out of. Definitely put a caveat on the property.
 
Okay, thanks for the info. She ownes 70% of the property so there is enough for her to remove me, its just she won't :( Unless there is a change in the weather, looks like I'll have to wait out the fixed period of the loan...

I'll be talking to my lawyer about the caveat.
 
Which state is the property in?

Not sure what the laws are in the other states, but in QLD, if you lodge a caveat it will lapse after 3 months unless the other party consents to it remaining or you commence legal proceedings.

As such, a caveat probably wouldn't achieve much for you if the laws of your state are the same or similar to QLD.

Were you in a de facto relationship with your ex partner? You shold speak to a family lawyer. You could always threaten to commence property settlement proceedings in the Federal Magistrates Court and seek orders for the sale of the property (which you're entitled to do). A letter like that from a lawyer might get her moving.
 
One of the problems I can see in a fixed loan is that some lender would require a new loan contract to be written to remove the guarantor. This would mean cancelling the existing contract, possibly incurring break costs.

In this case, if I were the borrower, I'd refuse to re-organise the loan until the fixed term had expired unless the guarantor was willing to cover these costs. I'm no lawyer, but I'd suggest it's a reasonable argument which would likely have some support in a family court.
 
PT_Bear said:
One of the problems I can see in a fixed loan is that some lender would require a new loan contract to be written to remove the guarantor. This would mean cancelling the existing contract, possibly incurring break costs.

In this case, if I were the borrower, I'd refuse to re-organise the loan until the fixed term had expired unless the guarantor was willing to cover these costs. I'm no lawyer, but I'd suggest it's a reasonable argument which would likely have some support in a family court.
Click to expand...

Hmmm, so it is a risk to wait till the fixed loan period expires in Nov. 2012, but as you said there will be break costs involved.

Question: when the fixed period ends, is it possible for her to put me down as guarantor/co-borrower without my knowledge? I am hoping once the fixed period ends, she will need to find a new guarantor...

Thanks for the help. Much appreciated.
 
The property is in NSW.

I was in a de facto relationship, so hopefully my lawyer will be able to assist with what is best to do... Good to have this board to get ideas!
 
smXXXX said:
Hmmm, so it is a risk to wait till the fixed loan period expires in Nov. 2012, but as you said there will be break costs involved.

Question: when the fixed period ends, is it possible for her to put me down as guarantor/co-borrower without my knowledge? I am hoping once the fixed period ends, she will need to find a new guarantor...

Thanks for the help. Much appreciated.
Click to expand...

Doesn't really work this way. When the fixed term expires, the contract stipulates that the loan will revert to variable, or the borrower can choose to re-fix. A new contract is not written, so nothing occurs that might involve the guarantor.

The main risk is that if the ex defaults on the loan, they look to the guarantor. Is the guarantee limited to a specific amount or is it for the full loan?

These days most lenders are requiring that loan of this type be split into two components. First component is for up to 80% of the property value and is not secured by the guarantee. The second split is for the balance with a guarantee, thus limiting the guarantors exposure. This structure is a reasonably new development although limited guarantees have been around for years.

I'd say the best way to get the guarantee removed would be either negotiate with the ex, or get a solicitor involved. It my scare your ex into allowing it to be removed.
 
Are you entitled to claim half of her property in family court, if you were in de facto relationship more than 12 months? Or does this rule only apply in VIC?

Or at least you could threaten her that you will go after half in the court if she does not sign.
 
Tillie said:
Are you entitled to claim half of her property in family court, if you were in de facto relationship more than 12 months? Or does this rule only apply in VIC?

Or at least you could threaten her that you will go after half in the court if she does not sign.
Click to expand...

I'm not sure if that applies here in NSW, I will have to find out.
 
PT_Bear said:
Doesn't really work this way. When the fixed term expires, the contract stipulates that the loan will revert to variable, or the borrower can choose to re-fix. A new contract is not written, so nothing occurs that might involve the guarantor.

The main risk is that if the ex defaults on the loan, they look to the guarantor. Is the guarantee limited to a specific amount or is it for the full loan?

These days most lenders are requiring that loan of this type be split into two components. First component is for up to 80% of the property value and is not secured by the guarantee. The second split is for the balance with a guarantee, thus limiting the guarantors exposure. This structure is a reasonably new development although limited guarantees have been around for years.

I'd say the best way to get the guarantee removed would be either negotiate with the ex, or get a solicitor involved. It my scare your ex into allowing it to be removed.
Click to expand...

I will try mediation and explore more direct avenues as a last resort, but it is looking like the latter will be the road I travel.
 
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