promisary note

horselover100

Some years ago my friend and I bought a house between us . In 2004 I bought his half from him and he provided me with a private mortgage covered by a promisary note for £100,000.  The promisary note has interest added to it which is normal for them but he has always claimed he does not want interest.  I have many emails from him over the years right up to this year 2021 reassuring me he had not changed his mind and still did not want to apply interest.  I still owe £62400 on the private mortgage. I recently received a letter from his solicitor  telling me I have 28 days to either arrange an equity release or put the house up for sale. Under the terms of a promisary that is his right, however I was shocked when the solicitor said he was claiming interest despite all the years of reassurance that he never would want any interest which my friend confirmed to me in as late as January of this year. 2021,   I was so worried about the potencial interest mounting up, in 2012  he sent me a signed letter for my reassurance setting out in some detail that he did not ever intend to seek interest and wanted me to have a signed letter of the balance owed (£62400) to show in case either of us passed away and that letter was to protect mine or his benefactors of wills so the actual amount owing was clear to exacutors. 

horselover100

horselover100 said:

Some years ago my friend and I bought a house between us . In 2004 I bought his half from him and he provided me with a private mortgage covered by a promisary note for £100,000.  The promisary note has interest added to it which is normal for them but he has always claimed he does not want interest.  I have many emails from him over the years right up to this year 2021 reassuring me he had not changed his mind and still did not want to apply interest.  I still owe £62400 on the private mortgage. I recently received a letter from his solicitor  telling me I have 28 days to either arrange an equity release or put the house up for sale. Under the terms of a promisary that is his right, however I was shocked when the solicitor said he was claiming interest despite all the years of reassurance that he never would want any interest which my friend confirmed to me in as late as January of this year. 2021,   I was so worried about the potencial interest mounting up, in 2012  he sent me a signed letter for my reassurance setting out in some detail that he did not ever intend to seek interest and wanted me to have a signed letter of the balance owed (£62400) to show in case either of us passed away and that letter was to protect mine or his benefactors of wills so the actual amount owing was clear to exacutors. 

Just to complete the picture.  I have agreed to an equity release for £62400 but I can't complete because he will not confirm that amount.  His solicitor will not answer any letters but I says I have 28 days to comply. How can I comply when they will not confirm the figure I have pay and the equity release lender will not finalise until they do.

princeofpounds

Hi horselover. 

You probably need proper legal advice on this, but one thing to look into is that there is a legal doctrine called estoppel. That means that if another party has made clear, unambiguous promise in respect to something, in certain circumstances they can't go back on that promise to claim something else at a later date. 

You can find some explanation here, although this is in the context of trusts (I'm rushing a bit so just a random legal link rather than something directly applicable). https://www.ashfords.co.uk/personal-legal-services/disputed-wills-and-trusts/proprietary-estoppel.

As for your agreement to market/release within 28 days - are there any contractual penalties written in if you fail to comply? Or would he have to seek an injunction from court to enforce that term? If the latter, he may well win an order if it every gets to court but you have lots more time to seek legal advice about the way forward.

Maybe someone else has direct experience with similar situations.

hippocrates1

Kinda like when student loans decided to back date interest. Definitely legal to do so. 

horselover100

princeofpounds said:

Hi horselover. 

You probably need proper legal advice on this, but one thing to look into is that there is a legal doctrine called estoppel. That means that if another party has made clear, unambiguous promise in respect to something, in certain circumstances they can't go back on that promise to claim something else at a later date. 

You can find some explanation here, although this is in the context of trusts (I'm rushing a bit so just a random legal link rather than something directly applicable). https://www.ashfords.co.uk/personal-legal-services/disputed-wills-and-trusts/proprietary-estoppel.

As for your agreement to market/release within 28 days - are there any contractual penalties written in if you fail to comply? Or would he have to seek an injunction from court to enforce that term? If the latter, he may well win an order if it every gets to court but you have lots more time to seek legal advice about the way forward.

Maybe someone else has direct experience with similar situations.

Thanks for that, I definitely did rely on my friends written promise over the years and perhaps I could have managed to reduce the debt and therefore the interest if I had known he didn't intend to keep his promise on interest.  I could have attempted the Equity release earlier if he had not constantly kept reiterating his promise of zero interest

.

Irishpearce26

Legally he is within his right to enact the interest owed regardless if he said he wouldn't. Maybe remind him what he has said over the years and ask what has changed. Could it be that the solicitor isn't aware of the informal agreement?

horselover100

Irishpearce26 said:

Legally he is within his right to enact the interest owed regardless if he said he wouldn't. Maybe remind him what he has said over the years and ask what has changed. Could it be that the solicitor isn't aware of the informal agreement?

Thanks for your comment. I have reminded him and his solicitor several times but receive no answer.  I think the problem might be the rise in house prices which perhaps has blinded him with pound signs in his eyes

sheramber

Remember to notify HMRC of any interest you pay him as it will be taxable income.

horselover100

Irishpearce26 said:

Legally he is within his right to enact the interest owed regardless if he said he wouldn't. Maybe remind him what he has said over the years and ask what has changed. Could it be that the solicitor isn't aware of the informal agreement?

He put it writing and signed it, does anyone know if that makes any difference.

Irishpearce26

horselover100 said:

Irishpearce26 said:

Legally he is within his right to enact the interest owed regardless if he said he wouldn't. Maybe remind him what he has said over the years and ask what has changed. Could it be that the solicitor isn't aware of the informal agreement?

He put it writing and signed it, does anyone know if that makes any difference.

Unless its noterised its just hear say i believe? Hard to prove he was serious or a note on the back of a fag packet is legal I suppose.

horselover100

Irishpearce26 said:

horselover100 said:

Irishpearce26 said:

Legally he is within his right to enact the interest owed regardless if he said he wouldn't. Maybe remind him what he has said over the years and ask what has changed. Could it be that the solicitor isn't aware of the informal agreement?

He put it writing and signed it, does anyone know if that makes any difference.

Unless its noterised its just hear say i believe? Hard to prove he was serious or a note on the back of a fag packet is legal I suppose.

I understand that but after he sent me the letter promising no interest  he has followed up many times confirming that he has given his word "no interest" surely that is a sign he was serious in his letter of intent.