Home can be seized like any asset, but banks are reluctant
Published 16/04/2011 | 05:00
MANY people assume the family home has some kind of special protection in law, but in reality solicitors say the family home is just like any other asset, writes Laura Noonan.
And even when a home is owned jointly by a husband and wife and only one of them is in debt, lenders can still force the sale of the home to pay off loans. Faced with a joint-ownership situation where only one spouse has a debt, lenders usually begin by trying to strike a deal.
If a husband and wife own a house jointly and only the husband has debts, the bank will usually give the wife the option of buying him out.
This money can then be set against the husband's debt and the wife becomes the sole owner of the house.
The main complication here is valuations as there is virtually no activity at the high end of the property market.
This is particularly true in regional areas where there is limited stock, and with "unique" homes where there are no comparable sales to use as a reference point.
It's more complex when the wife isn't in a position to buy out the husband, which can often be the case when there are multi-million euro homes involved.
Sometimes banks will take a passive attitude. They'll go to the courts for a 'judgment mortgage' that gives them a legal entitlement to half the value of the house, and then they'll sit on that until the house is ultimately sold.
The bank also has the option of forcing the sale of a home and splitting the proceeds 50/50 with the wife, though this approach often takes years. Even if both spouses have massive personal debts, banks are often reluctant to actually seize properties.
If the bank seizes a property, it becomes responsible for security, insurance and a whole host of other bills.