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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Dear Lawyer I am looking for the legal advice with regards

Resolved Question:

Dear Lawyer

I am looking for the legal advice with regards XXXXX XXXXX individual person to person loan agreement. Originally the agreement was signed via so called person to person loan exchange. The exchange function is to match lenders and borrowers where multiple lenders may face single borrower just eliminating the need for the bank. UK person to person exchanges are:

Zopa

Funding Circle

Rate Setter

The person to person exchange function is to verify the borrower (financial sustainability, credibility etc.), verify the lender (UK residence, more than 18 years old etc.), match borrowers and lenders, maintain cash flows passing from the borrower to lender.

After loan agreement is signed every lender will receive the legal agreement between lender and borrower. Both Lenders and Borrowers names will not be disclosed. Rather there will be some identifiers. See the sample agreement from Rate Setter attached.

Questions on P2P reselling

Eligibility for re selling person to person loan agreements

Can the contracts on peer 2 peer loans be re sold at all? E. g.: Loan agreement between different persons (e. g. A and B) sold to or inherited by other person (C). So, person A sells the loan agreement to person C for GBP X.

Assuming contract can be sold to other individuals are there any restrictions with selling contract:

Not on the originated p2p exchange. E. g.: Contract was agreed using particular p2p exchange, but will be sold offline or via other web site

Selling to the citizen of the another country, particularly for the scenarios when citizen of another country cannot register on p2p exchange (e. g. p2p exchange eligibility criteria)

Selling the contract to the UK national (e. g. age restrictions etc.)



Person to person exchange consent / notification



Can the exchange where person to person agreement was originated potentially restrict lender rights for selling the contract to other individuals or organisations? Particularly allow person to do this only via that exchange?

Can the contract be sold to another individual or organisation without consent from p2p exchange? Should the exchange be notified about loan re sell?

How can new Loan Agreement Lender notify the exchange about change in ownership (after contract was sold from party A to party C)? E. g. just via mail? Will exchange be obliged to update the Lender details? Can exchange reject to do this on the grounds of Anti Money Laundering checks (e. g. person was not checked or cannot be checked – located in other country)?

Sample of the legal agreement is available upon request
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts :

Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

Does the agreement say it can be assigend please?

Customer:

Hi Alex

Customer:

This is what is says:

Customer:

6. Assignment of Loan Contracts
a. The Lender may assign his or her right, title and interest in this Loan Contract and all associated
rights under the Terms & Conditions to any third party via the Exchange.

Customer:

So, it allows to assign agreement only via Exchange..

Alex Watts :

What is it you want to achieve?

Customer:

Not exactly.. The idea is to transfer the agreement to another person bypassing exchange

Customer:

1. Can the contracts on peer 2 peer loans be re sold at all? E. g.: Loan agreement between different persons (e. g. A and B) sold to or inherited by other person (C). So, person A sells the loan agreement to person C for GBP X.

Customer:

2. Assuming contract can be sold to other individuals are there any restrictions with selling contract:

Customer:


  • Not on the originated p2p exchange. E. g.: Contract was agreed using particular p2p exchange, but will be sold offline or via other web site






  • Selling to the citizen of the another country, particularly for the scenarios when citizen of another country cannot register on p2p exchange (e. g. p2p exchange eligibility criteria)






  • Selling the contract to the UK national (e. g. age restrictions etc.)



Customer:

3. Can the exchange where person to person agreement was originated potentially restrict lender rights for selling the contract to other individuals or organisations? Particularly allow person to do this only via that exchange?

Customer:

4. Can the contract be sold to another individual or organisation without consent from p2p exchange? Should the exchange be notified about loan re sell?

Customer:

5. How can new Loan Agreement Lender notify the exchange about change in ownership (after contract was sold from party A to party C)? E. g. just via mail? Will exchange be obliged to update the Lender details? Can exchange reject to do this on the grounds of Anti Money Laundering checks (e. g. person was not checked or cannot be checked – located in other country)?

Customer:

Those are the questions..

Customer:

Unfortunately, formatting was not in good shape during copy & paste to justanswer.com

Alex Watts :

Of course, I just need to read this

Alex Watts :

I don't think the contracts can be sold by anyone other than via the Exchange

Alex Watts :

Whatever the Exchange eligibility is I do not know, but in any event it does not matter

Alex Watts :

Reading what you have said, it can only be sold via the Exchange otherwise it would be a breach of contract

Customer:

hmmm.. interesting.. what about special scenarios - e. g. lender is dying and passing the will to a person that is not eligible according to the exchange rules?

Customer:

(e. g. cannot be registered on this exchange - e. g. U. S. citizn)

Customer:

*citizen

Alex Watts :

I can only comment on UK law of course.

Alex Watts :

But if they are not eligible it will have to go to someone else.

Customer:

yes, of course..

Customer:

just exchange is in the UK and accepting only UK residents

Alex Watts :

I am not a probate lawyer either so I can't help you on who

Alex Watts :

But they are free to determine who it goes to

Alex Watts :

It could be held on trust of course.

Customer:

Ok. So, just as a summary:

Customer:

1. Contract can be sold or passed only via exchange, right?

Alex Watts :

1. Yes if that is what the contract says

Customer:

2. I can select anyone registered on this exchange according to this contract? (it says anyone)

Alex Watts :

2. If the contract says then yes you can

Customer:

hmm.. strange.. i have no functions to do this.. )

Customer:

so, it does not allows me to select particular person

Alex Watts :

I see, very strange but they must meet the exchange eligibility requirements

Customer:

ok... understood.. many thanks. i thought there should be some cases where i could sell it.. Is there any other advise you can give on this case?

Customer:

(e. g. ask some other specialised experts in loan agreements or securitisation)

Customer:

just wondering if i have any other options..

Alex Watts :

Sadly I havent seen all the terms.

Alex Watts :

If the agreement states it has to be via the Exchange then sadly you are bound

Alex Watts :

The contract is binding on you and them

Customer:

will it help if i send the agreement for review?

Alex Watts :

I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Alex Watts :

Sadly if it says you have to sell via the Exchange it wont make any difference.

Customer:

but is does have the paragraph.. i virtually copied it

Customer:

ok.. undertood

Alex Watts :

Yes - sadly you are stuck then it would seem

Customer:

Many thanks!

Alex Watts :

If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.


Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.


 


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