Lending money to friends & family

harryhound

To sum up: His father bought the furniture and her father paid a chunk of the deposit?

How much is the equity left in the property after HIP, EPC, Estate Agent & legals?

sugarplum87_2

Unfortunately the house has no equity, they will do well to break even.

Your summary is accurate.

Any ideas?

harryhound

I would think that the solicitor who handles the contract for the sale of the house will transfer half of the balance left (if any) into the bank accounts of the two owners. End of story.

I doubt the furniture is worth anything much? So going halves on that would be fair too.

Does either party have any other wealth? As the old Tom Paxton song goes "freedom is nothing left to lose".

If there is serious negative equity, the first of the two to go bankrupt would dump all the problems on the other one in a joint & severally liable contract..

vera3

Lending money to friends is a tricky thing. Somehow friends and family tend to abuse the rule that the money must be returned within a reasonable amount of time. I remember when I was a child my uncle loaned some money to my other uncle but with interest and all family members were outraged....

babyboom_2

Bossyboots wrote: »

How was the money paid?

If cash - it is your word against his and unless he deposited in a bank account is untraceable so you can't prove the existence of the loan.

If by cheque or electronic banking - then the transaction will be traceable and a Court would have to decide whether on the balance of probabilities this money was a loan and not a gift or payment for something.

Not having it in writing does not mean you don't have a agreement, just that you can't actually prove it.

I agree on this one. If you want to take this legally, you have to show to your proof that you gave him the money. Your friend could simply deny it to your face, in short, nothing will happen. Sometimes, things like this happen to us, so we can exercise sound judgement and good decision making, most importantly, when money is involved.

Steel_2

Just wanted to say, I've been reading this thread today and my heart goes out to all of you who have been taken in and treated dreadfully by so called friends and family.

It's very hard to say no to someone who is desperate and begging in front of you. We think the only thing you can do is plead poverty. We've had to do this lately with a sibling who spends money like water and is always in financial trouble, yet within days of receiving money any money blows it on cars and consumer goods and holidays. We've never yet lent them money and never will. We know they have defaulted on paying people back before.

The last time they tried they very helpfully came up with all sorts of suggestions as to how we could lend them money even though we kept telling them we didn't have any way of doing it. For example, we could get a loan out for them. We could remortgage our house to get our 'overpayments out' (oh yes we now regret ever mentioning at a dinner once we overpay our mortgage). We could live on one income for a month and give the other one to them. We could get it off credit cards for them. The list of novel ways they came up whereby we could land ourselves in trouble to bail them out were truly staggering.

We're not rich, but we manage and save a little here and there. We're not destroying our financial stability for them, sibling or not.

The only money we've ever borrowed was £1k from my parents-in-law when we first moved into our house and had little money for basic repairs to keep the place warm and dry (it was a fixer upper). We paid that back within 2 months by selling what we could and scraping the money together from our wages. we hated being in hock to someone else...

dainaf

I had the same situation. Your replies are great. Thanks a lot! Stupid situation but it is a great lesson for future.

Buns_Mum

This situation is slightly tricky! What happens if the person requesting the loan from you also has access to all your financial information eg. an IFA? Because I also considered them a friend, a while back I leant my IFA a very large sum of money which they have failed to pay back within the agreed timescale (we had a written contract). It now appears that they are in severe financial difficulties and I've just found out that they have also done the same thing to another client/friend. This person is obviously taking advantage of their financial knowledge so would this be considered a criminal matter?
Thanks.

molerat

If not criminal it is surely a serious professional conduct matter and should be brought up with the relevant authorities.

Buns_Mum

Unfortunately this person isn't registered with the FSA any more so not sure what other bodies I could complain to. Also worried that given the seriousness of their debt problems that they may well have tapped other clients too but not sure how to find out.