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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Hello ... I'm looking for a confirmation (with a bit explanation)

Resolved Question:

Hello ...
I'm looking for a confirmation (with a bit explanation) to a situation I'm facing, trying to help my friend :
They would like to start their own business = restaurant, but they don't have enough money. They have used all their own saving + the max of the personal loans they could get on their names.
So they have turned to us and asked if we could take a personal loan and lend them the money. I'm not really keen on doing this, as should something happen or the business would not work - it would be me who would have to pay the money.
BUT to this they have offered/suggested that we would write an RESPONSIBILITY agreement, that they would take the full responsibility to pay the loan. According to them = their solicitors and bank loan advisor (who suggested this) it is a normal(?) procedure and that with this document they would take the full responsibility for paying the loan. Apparently we would not be responsible for anything (because of this document) and if they would not be able to pay the debt, the bank would deal only with them. Even our credit score should not the affected by their incompetence not to pay for the loan !
+ they promised to take the loan on themselves after a year -> on their company, as after a year they would be able to get loan on their company (as told by the bank loan expert)
Now, this sounds too good to be true, so therefore I would like to ask if someone can confirm or disprove their suggestion?
Thank you in advance.
Zdenek
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello Zdenek my name is ***** ***** I will help you with this.

Alex Watts :

For now please let me know the amount of the loan and if they own their own property?

Customer:

25000 GBP should be the loan ... and they do own a property, though still paying the mortgage for it = started 4 years ago and they didn't get any deposit down as they took the advantage of some "program" for firstbuyers.

Alex Watts :

Ok, you have a choice. Lend it and I would ask for a secure charge on the property or not

Alex Watts :

What you can't do is transfer the liability

Alex Watts :

If they default the lender will come after you, make no doubt about that

Alex Watts :

But if you get a charge on their property and they default, you can make them sell it

Alex Watts :

The process to get a charge is easy and would cost you no more than £50 or so

Alex Watts :

Its a single document to the Land Registry

Alex Watts :

But you will need a contract drawn up setting out each parties rights and responsibilities

Alex Watts :

But you can complete form RX1 and have it sent to the Land Registry to secure a charge

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

Please, few more questions Alex :

Customer:

Since they are paying for the house where they live for cca 4 years ... would the bank accept such CHARGE as in my opinion, they don't owe it yet ?

Alex Watts :

Well they have a mortgage, you would go behind that but no differrent from a secured loan

Alex Watts :

In any event you would still have a right to force a sale.

Customer:

2. basically ... can we say with 100% that the "loan expert"in the bank wasn't right about the "transfer of responsibilities@ - right ?

Alex Watts :

I dont understand what you are asking?

Customer:

Sorry Alex ... would you be so kind and rephrase the "YOU WOULD GO BEHIND" .. I do understand words, but can't get to the meaning of it :( .. sorry, not a native English person (thanks)

Alex Watts :

Ok the mortgage would be charge 1

Alex Watts :

You would be charge 2

Alex Watts :

So if there was a default and the house was sold, charge 1 would be paid first, then you if there is money left

Customer:

2. it was the loan expert in the bank, who said to them, that after they would ask us, to get the loan and then sign with us and agreement about taking full responsibility ... it would be still US who is responsible, right?

Customer:

So .. even withthe charge, we still might get into risk, right ?

Alex Watts :

Yes that is right

Alex Watts :

Even with a document YOU are responsible for the loan

Customer:

Alex ... thank you very much.

Customer:

That's all I needed.

Alex Watts :

Can I clarify anything else for you?

Customer:

Well ... not now. I have all I needed.

Customer:

Have a nice rest of the day.

Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience: Solicitor with 5+ years experience
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