Family has owed me £1000s for almost 10 years - please help

somethingidontno

A close family member has owed me a lot of money for a lot of years - apologies for the long post, but you need to know the whole story.

In 2004 my daughter bought me out of the house formerly owned by my daughter and I. To ease her finances, as she had married in 2006 and her new husband was trying to start up his own business, I agreed to £7.5k of the £22.5k due to me (50% of the then equity) being placed on a ‘charge’ against the house. This charge was to be paid within 5 years, after which 5% interest p.a. would become payable to me. Documents were drawn up by the solicitor and my daughter and I both signed to that effect.

After their marriage broke down in 2007, my daughter fell into financial difficulty so I loaned her £1.8k for mortgage arrears; court documents had already been issued, the bailiffs were virtually knocking on the door and my daughter was, understandably, distressed. We agreed that this loan would be paid back within six-months, a target my daughter (by now with a new partner) was confident she could meet.

I should point out that the property in question is the house I was born in and had lived in for over 20 years, so apart from wanting to help my daughter, there were also strong emotional reasons for stepping in. I should also point out that my daughter is in her 30’s with no children, not a 20-something, or a struggling student.

I then lent her a further £700 in 2009 for general household expenses as she appeared to be struggling despite having a good, permanent job as well as contributions from her partner towards household bills. I made this final loan on the basis that the now £2.5 ‘personal’ loan would also be recorded via the solicitor who had drawn up the original legal charge, thus ‘covering’ myself legally to the effect of £10k. I now had no further savings. I became disabled in 2008 so live on disability benefits and could really do with having my money repaid: if not all, then at least the 2007/2009 top-ups of £2.5k. A lump sum would enable me to have some quality of life.

My daughter (and her partner, who is now on the mortgage but does not have a full share because of ‘pre-marital rights’) claims she has applied for a re-mortgage 7 times in order to dispense with the charge and pay me back, but in the current economic climate is repeatedly turned down due to her poor credit rating. This I understand. What I don’t understand is how she can live as if her debt to me doesn’t exist, e.g. buying new home appliances and furniture while I have secondhand, enjoying meals and drinks out, holidays, festivals, new clothes etc. The interest of £500 p.a. first became due 31 Dec 2011 but as she didn’t have the money to pay me we agreed she would make monthly payments throughout 2012 to clear the 2011 arrears. But the £500 for 2012 becomes due on 31 Dec 2012 and I know she hasn’t put that aside, either.

She asked me to negate the interest and to accept £1000 p.a. via continuous monthly payments, which she wants taken off the £10k directly. I can understand her reluctance to pay the interest (even though she did agree to it) and can appreciate she wants to start eating into the debt itself, but doing it this way will take her 10 years! Even if she sticks to it for that long, I will be 63 by the time it is paid – almost 20 years of waiting for a loan agreed when I was 44! She has also hinted at my writing off the debt, but I can’t afford to as it reflects my life savings; plus I believe paying ones debts is a part of life and of growing up.

I know I have the right to recover the £2.5k (which I believe is under an ‘equitable charge’?) via the small claims court and to force the sale of the house for the £7.5k (a charge on the mortgage/Land Registry) but obviously I am reluctant to instigate either as this is my daughter, plus I'm not sure the house now has enough equity anyway, as it still needs a lot doing to it. I had also hoped my childhood home would remain in the family… The trouble is, she knows this and I think she is relying on me doing nothing about it.

We have now reached the point where she is ignoring my suggestions that we discuss the matter to see if there are any other ways we could proceed. The more she ignores me the more she is driving me towards taking the actions outlined above and the easier it will become to detach myself emotionally from both her and the house.
Any suggestions?!

NeverEnough

What a horrid situation your daughter has managed to put you in, despite your willingness to help and sensible approach to ensuring the debt was properly noted . I think you have answered your own question really, she really appears to have no intention of paying anything back in the forseeable future and appears quite keen to lean on you to change goalposts etc about agreed loan arrangements.

At this point, I would keep it simple and put her on terms - write to her stating that you require the payments to be brought up to date within 30 days or you will be seeking to recover the amount owing. Its not as if she cannot do this, as you say they are seemingly living quite a lavish lifestyle and simply ignoring the responsibilities as she feels you can simply be manipulated or leant on and you will back down and let her get away with it.

Basically, its crunch time- either put her on terms and stand your ground and get your money back, or allow her to get away with it and never pay you back at all - seems she is actually keen on doing that! Obviously, any efforts to stand your ground will no doubt cause friction, so be prepared for that. I would not want contact with a close family member who treated me like that anyway, so try to take the emotion out of it, and out of the house as well. She is your daughter, but she is behaving incredibly badly, only because she has got away with it to this point. Only you can change it.

Good luck.

opinions4u

Cut her off completely.

DCFC79

Good luck getting this sorted OP,

roger196

Before going down the legal route, make sure that all the documentary evidence to support the loans actually exist in writing. Get a copy of the charge from the land registry etc. Be prepared for a claim that the loans were in fact gifts, either at the time they were made or subsequently.. There have been several threads on this point on this forum.
Be prepared for a irrevocable break up with your daughter. Are you sure that this is what you want?

somethingidontno

Thanks, NeverEnough and opinions4u for your fast response, I appreciate it.

NeverEnough - – you have hit the nail right on the head, I do feel I am being manipulated; even her non-contact is a form of manipulation in itself. I do not think I am being unreasonable in making these demands after giving her so many ‘chances’ to pay something back, and I am gradually coming to terms with the fact that this is going to drastically alter what used to be a very close mother-daughter relationship. So I guess it is now time to take the next step.

opinions4u – I agree that ‘cutting her off completely’ is what I ought to do and have every right to do, but will that not be like cutting off my nose to spite my face? I still need to recover some, if not all, of my money, which is why I have been trying to maintain some sort of communication.

Anyway, down to the practicalities of standing my ground: does anyone know how to go about forcing the sale of a house on which you have a charge? Would I start by getting it valued by an estate agent, then let my solicitor do the rest?

With regards to the small claim court (for the 2.5k) I think this can be done online now; has anyone had any experience of doing this?
Obviously, doing both of these things will no doubt incur costs to me – which seems pretty unfair! – but I suppose it is better to have part of what is owed to me than nothing at all. And, hopefully, such strong action might even teach my daughter that everyone has to pay their dues.

Mr_Incredible

Let it go, don't let it consume you, BUT LEARN BECAUSE THERE WILL BE A NEXT TIME! SAY NO!!!!!!

somethingidontno

Roger196 - thanks for your comments.
I have copies of the legal charges signed by both of us and witnessed by an independent.
No, I am not sure it is what I want to do, but I think it is what I have to do. I can't see any other way round it.

kerri_gt

What a difficult situation, but as others have mentioned, it seems your daughter has no real intention of paying you back.

This is your life savings and as emotional as the house may be for you, it's not going to keep you warm or take you on holiday. If there is (sadly) no other way to recover this debt, then it looks like you are going to have to instigate legal proceedings. It might be enought to give your daughter the scare she needs. If it doesn't and the house does have to be sold in the worst scenario, then at least you have your life savings back.

Some may question whether money is more important than the relationship with your daughter, and yes, this may drive an irrepairable wedge - but this is happening now anyway with the building upset and resentment. Old saying 'you can choose your friends but not your family' eh?

I understand you would like the house to stay in the family because you have emotions and memories attached, but this isn't helping your future. At the end of the day, it is only bricks and mortar, the important stuff like those memories will always be in your head and heart no matter who owns the house x

NeverEnough

Small claims should be very straightforward online, there is a fee of around £30 (sorry, didn't check!). Get copies done of all the correspondence and proof / emails agreements etc so its all in order and ready for anything. Write the story down carefully so it is easy to add to various statements, save it on computer and print off some coies as well - there is an area in the Small Claims Court papers where you need to add your statement.

As far as the charge is conerned, I think you will need to do it via a solicitor as it can become complex if daughter starts saying it was a gift etc. hopefully not too expensive- if you have home insurance, you could even get a free consultation with a solicitor or lok for one in your area who offers a free initial consultation. As for getting a valuation of the ouse- a drive by would be the only one feasible at present which is limited of course, but an estate agent could provide a reasonable valuation for the locality, I am sure.

dealer_wins

Any money lent to family and friends should be thought of as money you have gifted them, and if it is returned then its a bonus.

If you dont like the thought of gifting money to someone, then dont lend it.

In your case it you have 3 choices.

1. Carry on as before in the hope that she will start paying you back, but she probably wont.

2. Let her off the debt and in future refer to my thoughts on lending money above.

3. Cut all ties with her, and chase the debt in court, as you have sufficient evidence to prove the debt to a judge.