How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask tdlawyer Your Own Question
tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
73598664
Type Your Law Question Here...
tdlawyer is online now

I have leant a family friends business just over 30k and it

Customer Question

I have leant a family friends business just over 30k and it looks like they are going to go bankrupt. We have been advised about getting a second charge on their mortgage by approaching them and asking them for it. The thing is I dont really trust the owners wife and I think once I make a move amicably she will be trying to get rid of the house to release herself money to spend.
So the next step I was advised about was registering an interest in their property and starting the suing process getting a CCJ.
I think there is 60k equity in the house but how can I find this out? I was advised the mortgage debt may be on the title plan.
I really need advise on my best course of action. We never had an agreement drawn up but i have bank statements of money going out and payments being made back in when they were being paid back in.
Thanks in advance
Submitted: 3 years ago.
Category: Law
Expert:  tdlawyer replied 3 years ago.
tdlawyer :

HI thanks for your question.

tdlawyer :

My name is***** may be able to help with this.

tdlawyer :

If this was a normal loan into the business, and you were not buying her property in any way, then you're unlikely to be able to put a caution on her property at the land registry. This would likely be considered an abuse of the land registry procedures as you need to have an interest in your friends' property to be able to do this (e.g. ownership).

tdlawyer :

If you get a charge now, and she is insolvent, then it's likely to be ineffective anyway, as a trustee in bankruptcy could apply to set it aside.

tdlawyer :

This is because she would be preferring you making your position more favourable in the bankruptcy, which she is not allowed to do.

tdlawyer :

Your best bet is to get on and sue her and get a judgment for your money. Then you can try and take enforcement action against the property or via other means to recover your money.

tdlawyer :

If in the meantime, before you complete your execution of any court judgment, she does become bankrupt, then it may be too late to do anything which meaningfully changes the position to your advantage.

Customer:

The business owes £150k to its suppliers also. Thats why I want to get in there quick as I think the only equity she has is in the house. She has no other assets

tdlawyer :

Is she trading through a company and was your loan to the limited company?

Customer:

Her husband was trading as a sole trader and the loan was to the business name he was trading as. I was getting payments back from that name on my bank account. Then this last year he changed the business name to a different one because he couldnt get credit and it was put in his wifes name and she was acting as a sole trader under this business. I was getting payments back from this business name then.

tdlawyer :

Okay, so it was to the individual, that's the important point I just wanted to check. That's okay, as he would be liable to repay a loan made to him, but sometimes people don't appreciate the difference between a limited company and a sole trader, but it seems you do.

Customer:

The solicitor i spoke to before said about registering an interest in the property so that when I sue her if she tries to do anything to the property in the time it takes then it will come up on any searches. Is this feasible or shouldnt i bother

tdlawyer :

Well, you can do this, but technically, you shouldn't. In reality, all that often happens is the application is objected to and subsequently dismissed by the land registry later on, but it might delay things and give you notice of an intended sale. That said, it's not the proper thing to do as it's technically an improper application when you know you have no basis to make the application.

Customer:

ok so i should just go ahead and sue. how do i start this process and is there anything i should know in the process? esp with regard to the other creditors. at present they are oblivious of her situation.

tdlawyer :

The most important general thing to appreciate is that if you lose (for whatever reason), you are likely to be ordered to pay their reasonable costs in defending the action.

tdlawyer :

For that reason, I would always encourage you to seek professional advice.

Customer:

how would i lose? i mean if there is no equity in the house left to pay me then i understand i wont get my money back at all but surely I couldnt lose a case when i am owed so much money

tdlawyer :

You would lose if you coulnd't prove the loan was made, for example.

tdlawyer :

I'm not saying you will - I don't know near enough to comment either way, but you asked if there was anything you should know, and you should always understand that there is always a costs risk in claims for over £10000 (i.e. over the small claims limits).

tdlawyer :

Does thia answer your question tonight or is there something more you would like to ask me?

Customer:

one last thing. so you think i should go through the suing process with a solicitor. its not something i should attempt on my own

tdlawyer :

No, I wouldn't recommend you do it on your own, I would always encourage people with this type of case to use a solicitor.

tdlawyer :

It's in the very formal court system and it's important you get things right.

Customer:

ok thanks. have a good evening!!!

tdlawyer and other Law Specialists are ready to help you