Hello bluelemon_peel and welcome.

We've certainly heard over the years that in many instances valuations are not done until after a trust deed is signed.

I don't know if guidance has been introduced meaning that they should be. Our experts may be able to advise...

Certainly the firms here offer some form of valuation to clients prior to signing a trust deed as unexpected equity can cause so many issues later on. We do advise homeowners not to sign a trust deed until they have some degree of certainty about the amount of equity that they actually have.

I take it that you're being asked to pay equity now?

Do you dispute the figure?

Thanks for your reply.

We are not being asked to pay equity at present but we have reason to believe that we signed the Trust Deed based on a summarized valuation of 170,000 rather than the correct property valuation carried out by their surveyor which was 160,000 which left us with 8,000 equity not including solicitors & tax fees, not sure the exact amount but speculate it would be 3,000.

Which equity will the Trustee being looking for?

Hi bluelemon_peel.

You'll need to ask them to know this for sure. I'd have obviously thought it would be based upon a real valuation rather than an estimate though.

You should also ask them whether they'll make any allowances for selling costs. Some firms seem to (£5000 is often quoted), others may not.

Finally, I think you'll also want to ask whether:
1 - The amount for equity was fixed at the time the trust deed was signed (and valuation done) or/
2 - The property will be revalued at the end of the trust deed and the actual equity figure that is relevant to you will be worked out then.

Thanks for the information.

Another question in regards to the Equity.

Based on the information gathered I'm I correct in thinking that the Trustee can sell the property that would cover the cost of the mortgage & selling costs if we don't have any funds at the end of the 3 years to pay the equity.

If that were the case would the Trustee then extend the Trust Deed even longer again our will.

Hi again.

Selling the property, or at least selling the property against your will, would be the last resort for a trustee.

Where the sums of money involved are modest it's quite common that people choose to extend their trust deeds to pay the cash over in installments. Other times people are lucky enough to know someone that can pay it over for them in a lump sum.

The sale of the home should end any obligation for equity related to that home, even if the sum realised were less than hoped for.

The sum of money involved is unfortunately to much pay in a lump sum unless there's a windfall.

By the sale of our home would that not then allow the creditors to peruse the monies owed under the TD when it ends.

A windfall will not be the answer. That would vest in your trustee anyway and be separate from this equity obligation.

We've heard from our experts in the past that the sale of the home would bring to an end the trust deed if that equity were the only remaining obligation. This would be true even if it went for less than previously expected (and you'd then be discharged from your debts).

Perhaps one of them could confirm for your reassurance...

I've contacted the Trustee and asked for a copy of both Trust Deeds including the equity.

If the equity is based on their estimated valuation and not their surveyors valuation is the Trust Deeds technically still valid.

If the valuation isn't based upon a real vaulation you'll be in a strong position to challenge it and get it corrected bluelemon_peel.

However I'm pretty certain that the amount that you're asked for in terms of equity will be based upon a real valuation.

Theoretically if we were allowed to move to another Trustee what would happen to the fees paid so far?

Hi bluelemon_peel.

I'm afraid that isn't generally something you'll be able to arrange.

Earlier you mentioned that we might be in a position to challenge the valuation if it's based on an estimate however could the Trustee wait until the end of the Trust Deed and have it revalued, if that were the case and the valuation was higher than it's a bit of a risk to challenge the valuation.

We really won't know until the Trustee sends the paperwork through, it's just very worrying the whole uncertainty of it and to be honest we really don't have much faith in our Trustee.... then again they might just surprise us.

The equity will almost certainly be based upon one of two systems:

1 - The property was valued at the start and the equity sum due fixed.

2 - The property will be revalued at the end and the equity sum due fixed then.

If it's the second option any figures given to creditors before would have been estimated based upon the facts at the time, but subject to change.

I don't think you're going to be asked for equity based upon an estimate rather than a valuation (though of course, a valuation itself is somewhat of an estimate... albeit by a professional).