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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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I work family's property company. My mother and father

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I work for my family's property company. My mother and father are the registered directors. The shareholders are my mother and two brothers, each with 30%, and me with 10%. My mother is buying a flat for her and my father to move into, getting a residential mortgage using their wages, then getting the deposit and legal fees and stamp duty money by remortgaging a property that the company owns to release equity. My mothers mortgage broker has said that for the remortgage to happen, all the shareholders need to fill out and sign an application form, provide three months bank statements, each detail their personal budget plan, each detail their statement of means, and provide proof of income.
I am worried about the risk of the company defaulting on the mortgage and the lender them coming after me, my house, my savings and my assets to cover the shortfall because I'm effectively co-signing a loan.
Am I right in thinking that this would be a massive mistake in that the lender could just take my home if the company couldn't make its mortgage payments?
If this is the case, is there another way around it so that I can go back to the mortgage broker and provide an alternative approach?
Submitted: 1 year ago.
Category: Law
Expert:  Nicola-mod replied 1 year ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.
Yes please I'm happy to wait. Maybe Alex or Jo C or Astonlawyer could assist me?
Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  Ash replied 1 year ago.
Hello my name is ***** ***** I will help you.
is the mortgage in the shareholders name or company name? Is the company Ltd?
Customer: replied 1 year ago.
The company is limited. The mortgage will be in the company's name, not the shareholders names.
Expert:  Ash replied 1 year ago.
And there is no personal guarantee from the shareholders?
Customer: replied 1 year ago.
Does there need to be a personal guarantee from the shareholders? I was just told to fill out the mortgage application form with the other shareholders as "that's what you do when you apply for a buy to let mortgage as a company". But I don't want to put my assets up for possession if the company were to ever default on the loan.
Expert:  Ash replied 1 year ago.
If the application is in the name of the company and you are not giving a personal guarantee then you will not be liable if the company defaults.
But if there is a personal guarantee you are personally liable. A limited company is protected by that company and as such there is no personal liability, except for a personal guarantee.
So yes, if the loan is to the Ltd company there would need to be a personal guarantee to the lender to come after the shareholders.
So no, as it stands they will not be able to come after your assets.
Can I clarify anything for you about this today please?
Alex
Customer: replied 1 year ago.
I am being asked to sign as an applicant on the mortgage. So would that mean if it's all went bad it's my mortgage as well so my assets would be up for grabs?The form im being asked to sign is a 'conditional offer request for a commercial mortgage'. I have to enter my 'applicant' details including my employment details, whether I'll be living at the property upon completion, It says that "ownership of the loan may be transferred to a successor or assign of the lender and administration for the loan account may be transferred to an agent, successor or assign of the lender in each case without further consent of or notice to me. I agree that all information provided is true and correct and I understand that it is being used to determine my credit responsibility. This report will be used to evaluate and determine my creditworthiness or insuring the requested loan..."Print application name, signature etc Then there's a form called domestic residential income and expenditure details, monthly salary, income, outgoings, credit cards, credit agreements, council tax etc - net income/ expenditure; statements of means and so on.I'm being asked to co-sign on this loan aren't I?I'm a minirity shareholder and employee of the family company. If they're making me sign on as an applicant, I'm therefore having my creditworthiness examined so that my assets can be taken away from me in the event of a breach of the mortgage/failure to pay.Is that correct?
Expert:  Ash replied 1 year ago.
I see. In that case then yes, it sounds as if you would be personally liable but I would check. It may be that its loaned to the company and only the company is liable - check that.
But from the sounds above with the terms it sounds like you could be personally liable. So yes if that is the case then they could take all your assets including your home if the company defaults.
Does that clarify?
Alex
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience: Solicitor with 5+ years experience
Ash and other Law Specialists are ready to help you
Customer: replied 1 year ago.
This is what the mortgage broker replied:
The borrower is the limited company, Highpad Ltd, and as such the company is liable for the debt. However, the lenders will ask for personal guarantees to tie in the directors/shareholders and therefore making therm personally liable should the company default of any part of the debt.
So therefore if the company defaults, the lender could take my home and assets and savings, yes?
Thank you for all your help so far.
Expert:  Ash replied 1 year ago.
Yes that is correct.
So its in the name of the company but they will want guarantees. So yes the bank could take everything.
Does that clarify?
Alex

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