Hi portway

It's all to do with the timing. A Trustee can challenge a security for a 5 year period before the date of a Trust Deed.

This is to stop the general body of creditors being unfairly prejudiced. Creditors would argue that you were given £25k by family which is no different from being given £25k by a bank. Your actions would therefore give the family a preference should this be allowed.

Mark

I see. The 25k was paid to me in summer 2007...could that help?

Cheers

Hi portway

No, its not the date it was paid that is the issue. It is the date of any security over the property because of it.

If you had obtained the money in 2007 and registered a standard security or a variation on the deeds, you would have been fine.

Mark

I see. 20/20 hindsight. I assume it cannot be backdated!!

Trust deed not for me as my parents cannot be put at risk and I can't raise the equity. DAS would take over 10 years to pay. Can't see much of a way out without robbing my parents of their home. It's years more misery until they check out!

Thanks for all the help.

Hi portway

Unfortunately it cant be backdated.

I assume your parents names do not appear anywhere on the title deeds to the property?

Mark

They have owned the property for over 30 years. They disposed of it and put our names onto it in 2005. They were worried that if they were put in a home the government could use their property to pay for care. We objected but they insisted!!

Is there a case that my equity is the value between 2005 and now?

Also, I do not appear on the Land Register when I did a search on myself.

Not sure if any of that makes any changes to my situation. As far as my siblings and I are concerned, my parents maintain the property and we have nothing to do with it. They are actually in the process of selling it as the want to downsize, free up some capital and get a new car, cruises travel etc etc. How can I rob them of that!

Cheers

Hi portway

I think you will need to be absolutely clear whose name appears on the title deeds. This is critical. I have seen countless solicitor mistakes with these thing, so it is really important.

It is interesting you do not appear in the land registry search. Do you have access to the Land registry? If so, could you tell me ( even in private) whose name appears against the property.

If you would prefer, I can do a check at this end if you send me the property address in the contact form below. That way, I can advise you with no doubts over the position.

Mark

Hi Mark

Sent a PM through the link below.

Cheers

My apologies for getting a bit technical here, portway, but I am really floating a suggestion in Mark's direction here which might put a different slant on things.

Given that portway's sister is a creditor to the tune of £25000, and assuming that this debt can be documented satisfactorily, wouldn't the signing of a standard security in her favour now be an unfair preference rather than a gratuitous alienation?

This would mean that the relevant time period for a trustee being able to challenge such a transaction would be only 6 months rather than 5 years. Therefore portway could grant the security to her now and then sign a trust deed 6 months down the line without fear of legal challenge?

Hi Kevin

Sounds a little fairer given that my sister only acted in trying to help me out of debt in 2007 by releasing the only asset I had in the knowledge she would be paid back. I used the full 25k to repay creditors, I have proof of 15k to one but can't find the other statements.

Since 2007, as we all know, the market is a completely different place and my business turnover has taken a nose dive leaving me now very exposed and unable to keep up the payments.

I never seen the downturn coming (I'm not alone there) and never thought I'd end up putting my family at risk.

Cheers

Hi Kevin

Both could be used to challenge, but the creditor status does not alter the alienation.

Doing this from my iphone, but I think section 34(6) deals with alienations for prior loans (or obligations)

Mark

Again, more legal mumbo-jumbo here I'm afraid!

I imagine you are correct Mark, in that a trustee might well seek to challenge this as a gratuitous alienation, however a defence against this is that the alienation was made for adequate consideration. s34(6) says that "an alienation in implementation of a prior obligation shall be deemed to be one for which there was no consideration or no adequate consideration to the extent that the prior obligation was undertaken for no consideration or no adequate consideration"

Cutting through the legal-speak, essentially the Act is saying that paying off a prior debt (or presumably granting a security in that creditor's favour) is only an alienation if the debt was essentially "cooked-up" as a means of trying to evade this type of action. This is not the case here, and the £25k is all very real according to what portway is saying.

In practice, this would be an argument that would have to be had in court if a trustee did go ahead and challenge the transaction as a gratuitous alienation, but I think there is a very good case for defending it on this basis. It is certainly an unfair preference but again this would only apply for 6 months.

Whether portway would want to take the risk of signing a trust deed and potentially having to take on a lawyer to defend an alienation action is another matter...

I'm apologise if none of this makes any sense to anyone other than Shona and Mark!! Bit of a technical one (Mark's favourite type methinks!!)

Will be interesting to hear the others opinions...

Hi all

Sorry I have to disagree completely.

If you take this transaction apart piece by piece:

1. The property is mortgaged and the funds are divided at whatever split. The security for the funds has been properly properly registered in favour of the mortgage. Even if the full funds were paid to portway, there is no valid reason for registering another security for the same funds.

2. Payment of £25k was made from funds unknown. It appears from the post that these funds did not originate from the property equity release as there was no additional burdoning of the property. Therefore the funds came from a 3rd party (family member) This is a separate agreement which wholly takes out the property.

3. A security over the property would be invalid for the funds as these came from a 3rd party source and as mentioned earlier, the security for the funds released from the property have been fully accounted for in terms of the mortgage. The 3rd party funds have therefore no 'association' with the property you would try to secure.

4. Taking account of the above, a security granted at this time for a pre existing loan would have no chance of winning an Action of Reduction. The only chance would have been an existing deed of variation for payment of the funds.

If I had been the solicitor involved in the transaction for the original mortgage split of funds and subsequent 'loan' then i would have suggested a simple deed of variation, where the 1/3rd pro indiviso share of the property between the 3 parties, be altered to account for the share of the mortgage funds and the 'loan'. ie The share of the property be split 45%,45%, 10% or something similar give or take a %.

The above would have allowed for a completely valid transaction unable to be challenged.

Sorry if this is a wee bit techie. Donald Findlay eat your heart out!

Mark

Oops! spelling mistake

Am I alone in finding Mark and Kevin's exchange thoroughly interesting, while not really understanding too much of it?