Trust Deed not being fulfilled. Help please.

u4n90

In short I have a trust deed with my brother for a house.

My brother the trustee paid the council £30,000 for a lease.
My brother has a mortgage for the property of £80,000.
I provided my brother with £40,000.

The deed declared that my brother would hold the property, and discuss all dealings.
He "covenants" with me that he will pay the mortgage costs and keep me indemnified of any liability towards those costs.

The issue is he can no longer make the payments. He has been advised if he doesn't clear the arrears (of £1500ish) the property will be repossessed.

I was wondering what action or course of action would be available in this instance.

Any help would be greatly appreciated.

Regards. (Any more info needed to make a judgement please ask)

TrickyDicky101

What outcome do you want? Are you asking if it is worthwhile taking action against your brother?

Is there any equity in the property (given there is an £80k debt on it)?

Does your brother have any other assets?

u4n90

TrickyDicky101 wrote: »

What outcome do you want? Are you asking if it is worthwhile taking action against your brother?

Is there any equity in the property (given there is an £80k debt on it)?

Does your brother have any other assets?

I want to know if there is any recourse through the deed or other avenues to ensure i don't lose out on the property, which as stated in the deed, he was to pay off then transfer to me.

there isn't any equity in the property.

And my brother has limited assets. I know i could take over the mortgage payments but i was wondering if there is any other route to ensure the bank don't repossess, but so i am not left out of pocket. And due to personal circumstances, covering the payments for him so he pays me back at a later date isn't an option.

TrickyDicky101

Assuming the mortgage is solely in your brother's name then the bank has no recourse to you to cover his debts (ie the mortgage).

On the other hand, if your brother has no or very few assets, it doesn't seem to me that you have any way to retrieve your £40k - you have no claim on the actual property.

Other than by paying the mortgage, I don't see how you could prevent the bank from repossessing. If you did pay, other than by going to court, I see no way that you could enforce repayment from your brother.

Unless property prices rocket (thus generating free equity within the property) your brother is unlikely to have anything of any value which would make it worthwhile pursuing him.

getmore4less

the trust deed should have covered the can't pay and other exit requirements like death.

if there is no equity where did your money go?

regprentice

u4n90 wrote: »

My brother the trustee paid the council £30,000 for a lease.
My brother has a mortgage for the property of £80,000.
I provided my brother with £40,000.

I assume you are in England (in scotland a 'Trust deed' is the legal name for the Scottish equivalent of a debtors IVA)


Can you clarify what the £30K lease is.

I assume this is an extension to the leasehold of the property. If the Property is 100% mortgaged at £80K then the leasehold must have been very short to have required £30K to negotiate an extension? If so then i would have expected the value of the property to rise quite significantly when the lease was extended. As such that may be where some of your cash has gone?

I've read of some frightening leasehold renegotiation stories, but can't recall one to the significant proportion shown above.

Where did the other £10K go? (I assume as there is no equity that the property was mortgaged 100% for its market value of £80K. You provided your brother a further 40K of which only 30K was used to secure the leasehold. Leaving 10K)

Put very bluntly - The bank do not care about your trust deed and do not have any duty to you or your legal agreement. They have the first charge over the property and they will exercise that if the mortgage is not paid. There is no way I can see for you to prevent this process if you are unable/unwilling to put more cash into your brothers home.

If your Brother cannot repay the mortgage then the bank will eventually take the property from him and sell it at 'open market value'

They will return any equity to him after costs.

At that point he may then voluntarily return any surplus cash to you, up to the total of £40K. Or you can instruct legal proceedings to enforce the deed. This will be expensive and in the scenario given seems unlikely to be productive.