Hi garfield

I am surprised at their comments of accepting £1800 against a previous request for £27,500 and even more surprised that a firm would proceed with a Trust Deed when the equity is the same as the debt!!

My advice would be to put the offer to the Trustee and see what he says. However please do not deposit any money until you have the Trustee's agreement in writing.

Mark

Hi Mark,

Thanks for your reply. My Mum used a site of the internet to set up the trust deed which is beyond belief but never mind its happened now so I cant change it.
They only just asked for a redemption figure for the mortgage so they obviously had no idea the level of equity when it was first set up.
They havent actually said they will accept £1,800 but the lady on the phone hinted to me that if I offered more than that then the creditors may agree!
The house is valued at £120k and the mortgage £65k and I was told today that there is some law/rule in place that if a relative offered to pay the trust deed then the house value is taken at 85%.
Hence I was thinking of offering £18.5k:-
£120,000 x 85% = £102,000 less the £65,000 = £37,000 / 2 = £18,500

This all depends if I can get this money but my thoughts now are that they may accept a lessor amount.

Thanks

Hi garfield

It does sound like your mum has been given very poor advice.

There is no rule about 85%, although I have heard that some firms are using this is a rule of thumb - not sure where they get it from!!

Do you agree with the valuation of the property? Has a formal valuation actually been done? I think there is no harm in putting in a low offer and then increasing it if you have to.

Hi Kevin,

Thanks for your reply. Yeah thats what I'm thinking too.

No I havent had a valuation done yet, hope to get it organised this week, but I reckon £120k isnt far off the mark. Probably £130k max, £120k min.

By offering the trust deed something does this mean that she may not have to pay the extra year of £150 per month i.e if I say I am putting it on the market but if it doesnt sell for 6 months plus? will they accept deferred payment or will they still want the £150

Thanks
Garfield

You might be able to get an agreement with them that will satisfy them whereby your mum can stop paying the £150pm at the end of year 3. They may make it a pre-requisite for any deal though.

Hello garfield.

I think this 85% idea is probably coming from IVA's, rather than Scottish trust deeds, and that some advisers are getting confused between the two when they're talking to clients on the subject of equity.

The situation about the extra year of contributions also sounds like IVA talk rather than trust deed reality as well. In an IVA homeowners with equity that cannot remortgage may well have a standard clause requiring them to extend the IVA by one year instead of dealing with the equity. In a trust deed the full amount generally has to be raised one way or another.

In one way I'm thinking you should contact the trustee personally and clear the situation up with them.

In another way I can see an argument to "run with" what you're being told by the adviser you spoke to as it would probably represent a better outcome for you if it were to turn into reality.

The 85% figure is indeed used for iva's.

Paul

It's a massive difference between an IVA and a Scottish trust deed.

Nowadays an IVA generally has built-in mechanisms that protect a home where a remortgage cannot be obtained due to current lending conditions. A year of extra contributions takes the place of the equity.

It isn't the case with trust deeds, which could be a big concern if an adviser were to get mixed up on the subject or incorrectly assume that the same principle applies.

Its definitely a trust deed as have just looked at one of the letters and it is headed up trust deed (protected).
They have sent a letter stating that they are going to take another year and that she has to sign to confirm. However I phoned and spoke to them and they told me that they will not release the charge over the house until it is sold, or a third party makes an offer. They also stated that they will not make us sell the house.

Am i right in assuming then that they will never discharge my mum from the trust deed even after the 4 years is up?

That is my understanding of the situation but i may be wrong. Thats why I am thinking if I can agree for them to release the charge, i can then remortgage in my own name and offer them £18,000 maximum. But i cant see them releasing the charge before they receive the money.

I understand that it is my mums debt and that it has to be paid back but I am reluctant to offer £18.5k when they may accept less. Worst case scenario I sell the house, may a profit of £60k and pay them her half - £30k as at the moment they say her debt is £32k.

Am i picking this up completing wrong?

The 85% information I got came from a qualified accountant who deals with sequestrations and is based in the North of Scotland however he did say to ask them about it.
I didnt realise that was for IVA's and when I did ask them about it they said it wasnt the case but that is also when the lady said to me to offer what I could to see if they would accept

Thanks

Garfield

Hi garfield.

Is this extra year of contributions instead of dealing with the equity, or to buy some time to see if anything changes?

A trust deed would not normally be discharged unless all commitments to it are completed.

I have a question for our experts on this. Is there any reason why garfield and his mum's trustee couldn't work together for him to remortgage the home in his/her sole name and release a pre-agreed sum to the trust deed as part of the process?

Hi TrustDeed Assistant,

Thanks very much for your reply. I'm a 'she' [:D] should have thought of a better name than Garfield!!! [;)]

Thats exactly the queries I have. I dont know if its an extra year in replace of equity or not and when I phoned them they said no. This was an extra year of contributions BUT they would not discharge due to the equity but I do not know if this is right or not and how to get advice regarding this.

Plus I have written a letter today to the trust deed asking that exact question you have asked the experts so fingers crossed as that would be the answer.

Thanks

Garfield

I'd thought about writing "his/her" instead of "his".

Failed gamble!

Hopefully one of the experts will be along soon.

The extra year's payments should at least be deducted from the amount of the equity required to be paid.

In answer to the other point - yes, if you have a mortgage lender willing to lend you sufficient funds then your trustee would make arrangements to allow the remortgage to proceed.