Key points
This case in 30 seconds
- Situation
- Both sides agreed the property would stay with our client, but her income alone may not meet the bank’s remortgage requirements. She worried that if the bank finally refused the remortgage, the agreement would have a gap.
- Approach
- We helped our client gather the property and mortgage details first. We helped prepare the documents for the agreement terms and reminded her that the agreement must set out a fallback plan.
- Result
- The agreement sets out the fallback plan: whether the remortgage is approved or not, both sides know what happens next. After signing, we helped prepare the documents and reminded her to apply to the court on time for a consent order.
Three points when setting out a fallback plan
- The agreement should state a fallback plan for when the bank refuses, for example selling the property.
- Our client must transfer the mortgage into her own name within six months; if the bank refuses, the property must be sold and what is left after the mortgage is repaid is split equally.
- Only when the agreement is submitted to the court and made a consent order (a court order that records the terms you agreed) does it become a court order, which can be enforced if the other side does not comply.
Background
Both sides agreed the property would stay with our client, but her income alone may not meet the bank’s remortgage requirements.
She worried that if the bank finally refused the remortgage, the agreement would have a gap.
She was not sure how to word the agreement so that a bank decision would not leave them deadlocked.
- Not sure whether the bank will definitely approve the remortgage
- Not knowing how to word the agreement clearly enough
- Worried there would be nothing to fall back on, and they would have to negotiate again
She had looked at online templates, but the terms were vague and said nothing about what happens if the bank refuses.
Friends told her different things too: some said stating the transfer was enough, others said a separate deadline was needed, which left her even more uneasy.
Before signing, she wanted to know whether the agreement would still hold if the bank refused.
To find out, the first step was to set out a fallback plan in the agreement.
Why must the agreement set out a fallback plan?
The agreement sets out a fallback plan because the bank has the final say on whether a remortgage is approved.
Many couples assume that once the agreement says the property goes to one side, the bank will naturally approve the remortgage. In fact the two are separate matters.
What do the property and mortgage terms usually need to say?
Whether the property is sold, transferred to one side, or one side buys out the other’s share; who pays the mortgage; and by when it must be completed.
Stating the transfer but not what happens if the bank refuses the remortgage.
| No fallback plan stated | Setting out the fallback plan | |
|---|---|---|
| Property clause | Only says the property goes to one side | Property goes to one side, with a fallback plan stated |
| Remortgage deadline | No deadline stated | Remortgage must be completed within six months |
| If the bank refuses | Nothing stated | Property is sold and the balance split equally |
| Binding force once signed | An agreement exists between the two sides, but the court is not bound by it | Submitted to the court as a consent order; can be enforced if the other side does not comply |
The court cannot order a bank to approve a mortgage.
If the bank refuses, the original borrower remains the borrower.
What can the agreement say if the bank refuses the remortgage?
The agreement should state a fallback plan for when the bank refuses, for example selling the property.
Our client must transfer the mortgage into her own name within six months; if the bank refuses, the property must be sold and what is left after the mortgage is repaid is split equally.
After signing, how does the agreement go to court?
An agreement exists between the two sides, but the court is not bound by it.
Only when the agreement is submitted to the court and made a consent order (a court order that records the terms you agreed) does it become a court order, which can be enforced if the other side does not comply.
One dedicated consultant drafts and follows up the whole agreement until the court makes the consent order.
For the rest of what an agreement should cover, see “Divorce agreement”; for similar approaches, see “the case of a self-signed agreement the other side disputed” or “the case of a verbal access arrangement written as a schedule”.
Once the property and mortgage terms are clear, what remains is how each stage works in practice.
How we helped
From the first consultation to putting the agreement into effect, the same dedicated consultant follows your case. Our help comes in three stages.
From gathering details to signing and going to court, we explain to our client beforehand what each step needs.
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Gathering details
From the first consultation
We helped our client gather the property and mortgage details first.
At the first consultation, the dedicated consultant looked at the property and mortgage, and at the bank’s initial response to a remortgage.
With the details complete, drafting has a firm basis.
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Drafting the agreement
Once everything is in order
We helped prepare the documents for the agreement terms and reminded her that the agreement must set out a fallback plan.
The terms state who keeps the property, who is responsible for the mortgage, and how things are handled if the bank refuses.
A clear fallback plan means the bank’s decision does not upset what both sides do next.
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Signing and putting it into effect
After signing
After signing, we helped prepare the documents and reminded her to apply to the court on time for a consent order.
The agreement is submitted to the court together with the application, to wait for the consent order.
Once the consent order is made, the agreement can be enforced.
Throughout, the client could phone the dedicated consultant at any time, in Cantonese, Mandarin or English.
We explained every court letter first, and what needed following up.
We are a divorce consultancy. We help you organise information, prepare documents and understand the procedure. If your case needs legal advice or a representative in court, we will tell you honestly and help you make other arrangements.
With the three stages joined up, this was the outcome.
Outcome
The agreement sets out the fallback plan: whether the remortgage is approved or not, both sides know what happens next.
Once the court makes the consent order, steps such as transferring the property begin as agreed.
Because the fallback plan was written in advance, whether the bank approves or refuses, neither side has to renegotiate.
Without a fallback plan written in advance, both sides often have to renegotiate if the bank refuses, which easily leads to disputes.
Now the agreement has been signed, the property and mortgage arrangements follow it, and our client no longer has to guess whether the bank will finally approve.
Throughout, our client did not have to face the bank’s decision alone, because the agreement already says how each outcome is handled.
Whatever the bank finally decides, the next step for the property and mortgage is already in the agreement, so neither side needs to make further arrangements.
How does the procedure change if your situation is different?
We took this approach because the property is kept by one side and the mortgage must be transferred. If your situation is different, the approach will change too.
Property sold, not transferred: the agreement can set out the sale of the property, or one side buying out the other’s share, according to your situation.
Other side does not comply: if the other side does not comply, you can apply for enforcement.
Deadline near, not approved: every situation differs; you can first ask the dedicated consultant how to follow up.
Three things you can do first in a similar situation
- First check that the property and mortgage details are complete.
- Discuss the initial arrangements for the property and mortgage with the other side.
- First ask the dedicated consultant how the agreement should set out a fallback plan.
FAQ
If the property goes to one side, can the mortgage always be transferred?
The court cannot order a bank to approve a mortgage.
If the bank refuses, the original borrower remains the borrower.
If the bank refuses the remortgage, what happens to the property?
The agreement should state a fallback plan for when the bank refuses, for example selling the property.
Must the agreement set out a fallback plan?
Stating the transfer but not what happens if the bank refuses the remortgage.
How specific must a fallback plan be to be clear enough?
Our client must transfer the mortgage into her own name within six months; if the bank refuses, the property must be sold and what is left after the mortgage is repaid is split equally.
Once both sides sign the agreement, is it already in force?
An agreement exists between the two sides, but the court is not bound by it.
When does the agreement become a court order?
Only when the agreement is submitted to the court and made a consent order (a court order that records the terms you agreed) does it become a court order, which can be enforced if the other side does not comply.
What can I do if the other side does not comply?
Only when the agreement is submitted to the court and made a consent order (a court order that records the terms you agreed) does it become a court order, which can be enforced if the other side does not comply.
If the bank agrees to the remortgage, does the agreement still need a fallback plan?
The court cannot order a bank to approve a mortgage.
Do you give legal advice or represent clients in court?
We are divorce consultants. We help you gather information, prepare documents and understand the procedure.
If your case needs legal advice or court representation, we will tell you honestly and help you make other arrangements.
Illustrative case: this page is adapted from similar cases we have handled. The people and details have been changed, and it is not a record of an identifiable client.
Every case is different, and the time taken and the result will vary. This page is general information only. It is not legal advice and is not a promise about your case.
