Company taking over negative equity apartment?

Shefwedfan

OK, this sounds very strange to me and sorry if details are a bit vague but my friend was telling me about this over a few beers

Ok, she has a 1 bed apartment. There is circa 50k negative equity on it. Usual story, bought in boom, never thought it would go down. So now she is married/kids etc so is renting it out and renting a bigger house herself.

The rent just covers the mortgage repayments.

She came to me saying this company, don't know name, have come to her offering to take over the house. So she signs over the house, they will take over the rent. So they take the rent, but they look after upkeep/fees etc.

They have said after 5 years the equity should be out of negative so they will fully take over house then. So she signs over the house now but it doesn't change to them till 5 years. They have said it is fully legal etc

Sounds as dodgy as hell to me, first thought it they scoop up rent, not pay mortgage and then do a bunk in a year or 2 when people start to notice....

Just wondering has anyone else seen/heard of something like this? Is it as dodgy as it sounds....

amcalester

Who pays the mortgage for the 5 years?

And what happens if it is still in negative equity?

Is the transfer of ownership guaranteed after 5 years or can they hand it back to your friend?

athtrasna

Take over the house? Do you mean the apartment?

lawred2

That does not sound kosher

Shefwedfan

amcalester wrote: »

Who pays the mortgage for the 5 years?

And what happens if it is still in negative equity?

Is the transfer of ownership guaranteed after 5 years or can they hand it back to your friend?

Ok so this company rent out apartment and they look after mortgage etc. Even if tenant smash's place up they will replace everything. So she will have no bills etc for the house anymore.

That was the main question I have, they said 5 years and it will be out but if another property crash then what happens?

On last question I dont know, she was vague on it and need to talk minus the pints

Shefwedfan

<mod snip: forum charter prohibits identifying individuals or companies>

This is the "company"

The_Conductor

It sounds like they are playing on people's emotions- they are suggesting there is a definite price increase coming over the next 5 years that will take care of any negative equity- I'm sorry, nothing in life is free (or can be guaranteed).

I'd seriously steer clear of this shower- they want you to lodge your property with them- until such time as its out of negative equity- thereafter, its their's to do with as they please.

The only upside for a person- is no more worry about the property- however, legally- as they are the owner until it is legally sold to the entity- they still have property tax and other considerations that they are legally liable for.

If at the end of the 5 years- you have equity in the unit- its not your equity- its theirs.......

I completely fail to see any upside for an owner in all of this- its just yet another plan for a company to accumulate a property portfolio- playing on people's emotions to do so.

I'd be very hesitant to suggest to anyone that this is a good idea or that they have anything to gain from interacting with this body- from the little I can find on them.

Explore your options by all means- but for crying out loud- look at the picture with your eyes wide open- this whole premise is playing on people's emotions right here right now- they still have legal obligations (including taxes etc) associated with the unit- and if its out of negative equity in 5 years- its not yours anyway.......... What the hell? Why would anyone willingly sign up to this?

Shefwedfan

I 100% agree, it sounded like that to me but she asked if I would check it out.