Repaying Trust Deed for a friend...

lansalot

Hi

Long-time listener, first-time caller etc..

Got a friend who has asked me to do him a favour. He has a trust deed taken out with Wilson & Andrews (Scotland) and has been advised there's a £500 fee that if not paid by (some date) entitles them to equity in his property? He has the money himself, that's now not the problem.

I was asked if he gave me the money, could I simply pay that £500 for him, as for some reason he's not allowed to pay it himself? I don't mind doing the favour, but to say it sounds a bit iffy is a bit of an understatement.. I've done a bit of reading, and can see that that's not untypical for some lenders/agents when it comes to Trust Deeds tho; but that's not totally stopped my alarm bells ringing.

I just don't want to find myself doing a favour and suddenly somehow finding myself signed-up for a share of any future debts or anything...

Any advice here?

Thanks
L

coolcait

It sounds like the classic "nominal sum to buy out the trustee's interest in the property".

It's usually used when the property has low or negative equity.

All it means it that if you pay £500 at an early stage of the Trust Deed, the trustee will/should formally state that he has no further interest in the property. The idea is that your friend won't have to worry about having to pay more later on in the Trust Deed if the amount of equity increases.

I should point out that not all trustees ask for the 'nominal sum', and will 'abandon their interest' anyway - but if your friend is already in the Trust Deed it's probably to late to do anything about it now.

The nominal sum should come from a third party, because if the person in the trust deed has £500 lying around, the trustee would probably want it in the TD itself, as it could be seen as an asset!

So, from that point of view, your friend's request is a bit iffy, since he's hiding an asset which the Trustee might be interested in, and pretending that it's actually a payment from a third party.

However, anyone who makes a third party payment to a TD, for whatever reason, won't find themselves liable for the debts in the TD. So you don't need to worry about that part of it.

lansalot

Excellent, thanks a lot for this. It's been a worry over his head, and I was kinda-simplifying in saying that he had it (he doesn't right now, but hopes to by the time the date comes up).

He has plenty other money worries to deal with right now, this is no simple feat for him to find it. As a quick look at his items on gumtree would show ;-)

Many thanks for your advice, I really appreciate it !