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JGM, Solicitor
Category: Scots Law
Satisfied Customers: 9980
Experience:  30 years as a practising solicitor.
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My husband and I stood as guarantors son to take out

Customer Question

My husband and I stood as guarantors for our son to take out a student loan on a flat in Edinburgh. The property was sold in 2006 at a profit of £81,150. My husband undertook to hold this money for our son until he was settled (verbal agreement). The account was opened in my husband's name as he said this was more practical. My son has now found out his father has taken £50K for his own use which he refuses to pay back. How can a guarantor become the beneficiary without the knowledge or consent of the owner and what can my son and I do about this please. Thank you
Submitted: 1 year ago.
Category: Scots Law
Expert:  JGM replied 1 year ago.
Thank you for your question.
Your husband has no right to the money. It doesn't have anything to do with the earlier guarantee. It is simply that your husband was holding the money as an agent for your son and has run off with a large amount of it.
Your sons remedy is to see a solicitor and demand the money back. If it isn't repaid your son will have to sue your husband for its return.
Happy to discuss further.
I hope this helps. Please leave a positive response so that I am credited for my time.
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 9980
Experience: 30 years as a practising solicitor.
JGM and other Scots Law Specialists are ready to help you
Customer: replied 1 year ago.

Thank you. So I understand from this that as a guarantor he did not have any right to the money - is that so? I am sorry to seem dense but this is the crucial point and I must be sure I have clearly understood it.

Do I also understand that even though the agreement was verbal it is still binding? Or, if he had no right to the money anyway, can I suppose that whatever he claims the agreement was it is not relevant?

If possible, I would still like to know how, given that the flat was in my son's name, my husband was able to transfer the money into his own name in the first place so he could easily access it. This - apart from the dishonesty - is at the root of the problem, because it meant for years he could simply help himself. I didn't query it at the time as I thought it was a matter of trust between my husband and our son.

When I wrote to him - (my ex-husband actually since we divorced a few weeks ago )- and said Robert was struggling and would he at least give him 20K back he said the money never was my son's. But it was a STUDENT loan - so I don't know how he can claim this. He went to see a property lawyer in 2006 when the flat was sold. I know the lawyer's name and that he works for a reputable company. But I never asked what went on. Now my ex-husband says he has been to another property lawyer - and named him - and he, my ex-husband, seems very confident we can't touch him. What could he have said to a lawyer to make him agree that my son has no claim to the proceeds of his own flat? What documentation/proof would a lawyer ask for?

My son and I have very, very limited means. I am 70 and had to give my ex-husband my share of the house in exchange for keeping my small pension as he doesn't have one at all, and my son is in Australia where his visa only allows him to work 20 hours a week in a bar. So I need to be very sure I have a watertight case before I embark on any legal proceedings. What is your opinion? The 'no win, no fee' lawyers don't seem to deal with this kind of case. Would Legal Aid be possible for my son as the matter would be raised in Edinburgh? even though he is currently in Australia - or is this not the kind of thing they deal with?

I look forward to hearing from you.

Expert:  JGM replied 1 year ago.
Unless your ex husband was called upon to repay the loan after your son having defaulted, he is not entitled to any money.
From your first narrative I presume that the money was transferred to your ex by agreement to look after. The money was transferred to your ex by agreement is what I understand your narrative to be so he had control although he wasn't entitled to help himself.
If the proceeds were transferred directly to your husband, your son would have had to have signed a mandate authorising that if the property was in your son's name. That is enough to for the lawyer but again doesn't allow your ex to use the money.
No win no fee is not particularly popular in Scotland except in accident claims. Legal aid is available even if your son is abroad. He would have to liaise by email with a solicitor in Scotland.
Customer: replied 1 year ago.

Thank you so much for this.

I'm sorry that for various reasons I have been unable to reply to you before now ( I was in Australia visiting family among other things.)

I contacted the lawyer I used for my divorce about this. She said ' the main thing Robert needs to explain/prove is why it was agreed that the money would go into an account in his father's name if it was agreed by everyone that the money was Robert's. And that it was definitely what everyone, including his father, agreed.

I told her your advice and pointed out that it was not unusual for parents to hold large amounts of money like this for their children -for obvious reasons - until they needed it as a deposit to get on the property ladder.

She seemed to completely dismiss all this and replied ' agreed the guarantor bit is totally irrelevant and the property belonged to Robert. It does not change my view re the proceeds and what was done with them. Robert would have to prove that his father agreed the proceeds were to be held in trust ( in my opinion)

So she thinks it is up to Robert to prove he didn't make a gift of this money to his father rather than up to his father to prove he had a right to it ...obviously I will not be using her again.

Since then, I have been unable to find an internet page that sets out the rights and obligations of a guarantor under Scots Law regarding the proceeds of the property. (I'm not very good at this kind of research) I should be so grateful if you could give me a link/website for this. It would be very useful for me to be able to send a copy when I am looking for a lawyer so I can ask their views. I can then choose a lawyer who agrees with your advice -- which is surely right.

Just one more thing that could be helpful for me to know in the future. When my ex-husband refuses to return the money - which he will -and my son is obliged to take the case to court - could his father be charged with theft? Because it strikes me that if you take money from someone without their knowledge and consent and then refuse to give it back - what else is this but theft?

If this is so, it may help persuade him that it is in his own interests to pay up.

Can I ask you if you have ever come across a case before where a father took money from his son?

Many thanks!

Expert:  JGM replied 1 year ago.
The lawyer is completely wrong. In Scots law there is a legal presumtion against donation or gift. What that means is that the law presumes that a payment was not a gift and that it is for the person receiving to gift to prove it was a gift.
As far as trying to find the rights and obligations of a guarantor regarding the proceeds of a property, you won't find anything about this because there isn't anything. A guarantor's function is to guarantee th debt of another and to pay that debt of the principal debtor fails to do so. Nothing in the law entitled a guarantor to withhold funds in th circumstances here unless of course money was owned from son to father which there wasn't here.
Finally, theft is the intention to deprive permanently an owner of its property. So technically the components of theft are satisfied. Whether you will get the authorities to treat this as anything other than a civil matter is another issue.
Customer: replied 1 year ago.

Thank you so very much for your help - and so quick. I am really grateful. ( and of course will rate accordingly) My last question is what kind of lawyer should I look for - that is, one that deals in property? contract? - what is this called?

Many thanks again

Expert:  JGM replied 1 year ago.
No, it's a civil litigation lawyer you need, not a property lawyer.

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