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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11753
Experience:  30 years as a practising solicitor.
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If I take over as signatory on a bank account and there are

Resolved Question:

If I take over as signatory on a bank account and there are irregularities from the previous signatory, will I be held liable for payment of debts should there be insufficient funds?
The bank accounts are for a Resident's Association and the previous factor has been stalling over providing access to the account. Yesterday the previous factor signed the mandate to allow a change of signatory.
The previous factor has now admitted that she has not been reporting tax deducted from our caretaker's wages to HMRC for 3 years. We have also just had a demand for £14 000 for a year's electricity supply, which normally should have been paid quarterly. Based on the a print-out dated the 30th Sept (not an official statement) given to me yesterday, there are sufficient funds in the account at present.
I have no reason to suspect that anything is amiss. However, the previous factor is leaving for a holiday in New Zealand on October 9th and several of the feuars are concerned that we don't yet have access to our funds and are suspicious. The accounts have not been audited for 7 years.
Yesterday, 1st October, the previous factor was going to log in online with me present, but the card she tried to use to gain access was out-of-date on the 30th September and she denies receiving a new one.
It also turns out that the previous factor had not registered with the property factor's register.
Submitted: 2 years ago.
Category: Scots Law
Customer: replied 2 years ago.
The previous factor has given us twelve signed blank cheques. The caretaker has some expenses to be paid. Can we legally use these cheques?
Expert:  JGM replied 2 years ago.
Thank you for your question.
It is the Resident's Association as a whole that would be liable for the debts of the Association, not the cheque signatory. The law of agency is that a principal, in this case the association, is liable for contracts entered into and authorised to an agent, such as a factor, provided that the agent makes it clear that he is acting for the Association. So if the agent messes up the caretaker's tax, the Association is liable and may have a right of relief or a case for breach of contract and damages. Similarly the liability for the outstanding electricity account is that of the Association.
Failing to register with the factor's register carries up to an unlimited fine or imprisonment up to 6 months or both.
I suggest you take control and get an audit done immediately as it seems there may be a damage limitation exercise to be carried out.
Happy to discuss further.
I hope this helps. Please leave a positive response so that I am credited for my time.
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