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03/11/2023 3:10 pm
Hello - I wonder if you can advise me please. If I had to sell my house - I am in year 5 of a 6 year trust deed. If I made any profit I understand this would need paid to the trust deed however would this just be the remainder of the amount that is left on the agreed trust deed or would this be the amount of debt that was the very original amount of debt at the start of the trust deed?
Many Thanks
03/11/2023 3:32 pm
Good afternoon(@smit0310)
Welcome to the forum.
Unfortunately if you sell you house while still in the Trust Deed then the whole amount of the profit would need to be paid into your Trust Deed for the benefit of your creditors.
Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
Topic starter
03/11/2023 4:14 pm
@annmarie-macdonald thank you for replying. So even if the profit was more than the original debt would they take all the profit? Thanks
03/11/2023 5:03 pm
@smit0310 There is not just the original amount of Debt there is also the Fees and outlays of the Trustee to be taken into consideration and not to complicate things further your creditors may be entitled to statutory interest accrued if sufficient funds are available. If you are thinking of selling your home before your Trust Deed ends I would approach your Trustee and ask how they would treat the sale of the property that way you will know what is expected from you should you decide to sell.
Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
10/05/2024 11:49 am
@smit0310 There's a potential solution to this.
You mention being in Year 5 of a 6 year Trust Deed. The final 2 years are presumably due to equity, and your creditors agreed to an "extension" in lieu of sale.
At the time of granting your TD you will have signed a Form 1B, this will probably have specified an amount of money that needed to be paid to deal with your equity, which corresponded to 24 x your disposable income at the outset. This may have been explained to you as a "term extension" or a "six year Trust Deed", however in this scenario, you have actually committed to specific amount of money, not a term extension. It is important that you double check the documents you signed at the outset.
If this is the case, you should be able to end the Trust Deed earlier by having a lump sum equivalent to the outstanding equity balance paid to your Trustee. This would all need to be done prior to you selling your home, you could not pay this lump sum from the equity proceeds.
As Annmarie highlights, prior to you meeting the obligations under the Form 1B, the full net sale proceeds would go to the Trustee who would first pay their fees and expenses, then your outstanding liabilities, plus statutory interest. Any remaining balance would then be paid to you.
