Recovering a debt from the proceeds of a house sale

ProDave

Short version of the story.  I am a self employed tradesman and I was contracted to do some work in a house being refurbished by a young couple who had just bought it.  All went well and first invoice was paid, but by the time I had finished and prepared the second invoice the couple had a major bust up, the bloke disappeared and left the woman with no money.  so the second invoice remains unpaid.  There is at least one other tradesman in the same situation with an unpaid invoice.

We know the house is going to be sold soon.  So here is my idea.

As soon as the house is for sale, contact the solicitor handling the sale by letter (this is Scotland) outlining exactly what happened and staking my claim for the unpaid invoice to be settled from the proceeds of the house sale.

Is that a sound plan or what other options do I have?  I have considered small claims, but the woman has no money and the bloke, nobody knows where he is now or his address.

TBagpuss

I am not familiar with Scottish law so recommend you check with a solicitor  - however in England you would need to have sued them first, then get a charging order to secure the debt against the house, at which point you are in a similar position to a mortgage lender in that the buyer will require the debt to be cleared (or at least for you to remove your charge, which comes to much the same thing for practical purposes) in order to proceed.

If you haven't done so already, another option may be to issue court proceedings to recover the debt - if they are looking to buy elsewhere the last thing they will want is a CCJ ballsing up their new mortgage application. 

Again, definitely talk to a Scottish lawyer but on the face of it, I don't think that writing to the solicitors will have much effect - if the debt is not secured on the house there's no reason it should affect the sale, so the solicitor would probably just say that they don't have any instructions to deal with your claim.

 https://www.citizensadvice.org.uk/scotland/debt-and-money/action-your-creditor-can-take/can-i-be-forced-to-pay-my-debts/ might be helpful -it's written to help debtors but you can see what you as the creditor would need to fo - it looks like you would need to get a court order and could then apply to enforce it over the house. Of course, sometimes just showing you are willing to do that can result in someone paying up.
 

Brie

Would there be any value in informing the solicitor of a intention to sue?  Not doing so would save money on both sides and may be of benefit to both.

This is of course assuming that the sale will provide something substantial enough to cover the invoice(s).

Thrugelmir

Commence legal proceedings once you've given notice and stake your claim. 

ProDave

The owner, at least the woman agrees the debt is due, but has no money to pay it.  I was hoping therefore that by staking the claim with the solicitor handling the sale, he would discuss the matter with the owners of the house and agree with them to settle the bill upon the sale of the house.  I know it would not be a legal charge on the house, but unless the owners dispute the debt I can see no reason they would do anything other than instruct the selling solicitor to settle it upon sale.

I could send a "letter before action" to the woman who's address I do have.  But what "action" do I take?  I have had a bad experience with small claims (that I don't want to delve into) so reluctant to go that route on my own.

One other option that I discussed but never had to do in the case of one previous no payer is to hand the debt to a debt collection agency.  I discussed a similar case with one before and they would take on the bill and pursue it adding all their costs to the final amount due including court if that was their chosen route,. so in that case the letter before action simply stated I would be handing it to a debt collecting agency and they would add all their costs to the final amount.  In that case the bill was paid, but mu concern here is until the house is sold the woman has no money and the bloke is untracable.

canaldumidi

ProDave said:

As soon as the house is for sale, contact the solicitor handling the sale by letter (this is Scotland) outlining exactly what happened and staking my claim for the unpaid invoice to be settled from the proceeds of the house sale.

Is that a sound plan or what other options do I have?  I have considered small claims, but the woman has no money and the bloke, nobody knows where he is now or his address.

Pointless. The conveyancing solicitor may, at best, pass your letter to his client, so you might as well write to the client direct. The solicitor will have no authority to pay you from the sales proceeds unless his client instructs him to.

You need to take legal action via the Scottish courts. If successful, there are various ways to enforce payment and one mechanism is to use the property.

If there's no equity in the property (eg mortgage = sales price) then even that won't help.

ProDave

Okay so what action do I take.  I do not personally as already stated want to deal with small claims, so is a debt collector my easiest route?

Brie

Thinking about it further - It would be crucial to know who actually owns the house in order to ensure you get something eventually.  Unlikely that it isn't in joint names but you can't assume the woman will pay the bill if the man owns the house.  

mjm3346

You will almost certainly need legal backing to stop them getting the proceeds of the sale 

canaldumidi

ProDave said:

Okay so what action do I take.  I do not personally as already stated want to deal with small claims, so is a debt collector my easiest route?

If you don't want to take legal action, your options are:

* tea and cake: a friendly chat and pursuade her to pay, maybe by suggesting installments

* threatening letters, promising legal action (even if you don't plan to do so)

* a private debt collection agent - they actually have few powers, can't repossess property or assets, can't enter homes without permission, can't adversely affect credit files. But some people are scared enough to pay..........

* negative comments on social media - works better the other way round eg where a contractor has let down a home-owner/client, as contractors value their business reputation

ProDave

canaldumidi said:

ProDave said:

Okay so what action do I take.  I do not personally as already stated want to deal with small claims, so is a debt collector my easiest route?

* a private debt collection agent - they actually have few powers, can't repossess property or assets, can't enter homes without permission, can't adversely affect credit files. But some people are scared enough to pay..........

As per my previous discussion with a debt collector, if their letters don't result in payment, THEY would take the matter to court to enforce payment and their costs of doing so would be added to the bill. Which is why I favour that rather than going to court myself.

You are right I don't know for sure the house is jointly owned but that was my impression. I would think they are jointly responsible for the debt, it was in fact the bloke that paid the first invoice. But as I say I don't know his current address, the woman told me she does not even know where he is and is dealing with him through a solicitor (custody issues with children)