Hi sanny and welcome to the trust deed forum.

This seems like a very unique situation that we haven't seen raised here previously.

My understanding would be that this change will have two main effects:

1 - You will have no further responsibility for the "secured loan" which in fact is effectively unsecured according to your trust deed company. The debt will be dealt with by your trust deed.

2 - You may, depending upon the size of the secured loan and the value of your home, find that you now have a significant amount of equity in the home. If that were the case I would assume that you would be expected to contribute your share of it to the trust deed.

Point number 2 above could potentially affect other owner of your home depending upon the circumstances. How much equity do you think would exist in your property currently without any liability for the "secured loan"? Was there any equity at the start of the trust deed that you were already expecting to contribute via the trust deed?

I am wondering whether the secured lender has any ability to challenge this situation; has your trust deed company had anything to say on that subject?

Hi sanny

An interesting post. Is your partner in a Trust Deed? This may sound like an ideal scenario, however it is far from it.

If your partner is not in a Trust Deed, then the company will pursue her for the full balance of the loan, less any payments made by dividend via your Trust Deed. This will also now make available any equity which you though was dealt with by the loan and may, depending on amounts, substantially increase the equity you need to pay.

I wish it was better news.

Mark

Hi Sanny

This is an unusual situation!

In addition to the above, I'm surprised that that this wasn't picked up sooner, as most firms do a property search over the property to confirm the 'secured' lenders at the onset of the Trust Deed.

Were the payments that you made to the loan company over the last two and a half years from the jointly named borrower also? If so the Trust Deed firm may not have much luck trying to recover these funds, unless they can prove that the funds came from you alone! Remember that the joint borrower will still remain liable for this debt and should make arrangements to pay the loan back.

Julie

Hi Amy
Many thanks for getting back to me. There was no equity at the beginning as we thought the loan was secured, but the trust deed company have now informed me that they have checked the land registry and the house is not secured against the loan. The trust deed company are informing me to cancel the direct debit with the loan company and set up a standing order with them. The joint onwer is not happy as the trust deed is in my name and they accepted the loan being secured when i started. They are not forthcoming with the answers to my questions.

Hi sanny,

For the reasons mentioned by Mark & Julie the implications of this could be quite significant for the other owner. I can very much appreciate why they are not happy about it, but your trust deed company has a legal responsibility to deal with the reality of the situation (irrespective of why it came to be discovered only now).

If you're not getting answers to your questions currently, the most effective approach seems to be to put them in writing and address/send them to your Trustee personally.

Hi once again
I have checked the documentation for the loan and it states on it that it is secured against the property. The only place the trustee has checked is the land registry for Scotland. Would this mean that if i refuse to pay the loan company they could force me to sell my home and if i refuse to the trustee's request of canelling the direct debit to the loan company and pay them they could make me bankrupt. any help would be good as i am confused.

Hi sanny

sorry it's late, just back from a trip up North and thought I'd check in. Sad I know!

It makes no difference if the form stated it's to be secured, if the actual registration of the security never took place.

There are a number of issues here. Does the joint party to the loan contribute to it in any way? The company can't force the sale as they don't have a valid security over the property. You need to stop paying the company, but whether you pay this to the Trustee depends on circumstances, hence the reason I asked if the other party made payment towards this. If yes, then they would need to pay the company direct as they still have a responsibility for the loan and this would leave no additional sums to pay the Trustee.

Is it Welcome Finance by chance?

Mark

Hi Mark
Many thanks for getting back to me. The joint party does not contribute to the loan as it comes out of my account. This has been the case since it started.
The company is not welcome finance.

Hi sanny

Sorry it just seems to be bad news.

To simplify matters;

* The Trustee will require a rethink of the contribution amount as you
no longer have the other loan to pay. The contribution will increase.

* You will now need to pay half of the new found equity at the end of
the Trust Deed.

* The Trust Deed will make payment of a dividend ( I hope) to all
creditors and also to the non secured new loan. This will at least
reduce the amount owing on the loan.

* One the non secured company are advised of the Trust Deed, they will
pursue the other party for the full outstanding balance.

I'm just sorry that it is not better news as these are matters completely outwith your control. Would there be some mileage in an action against the solicitor for not registering the deeds? Probably not.

Regards

Mark