markdirac
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Post by markdirac on Oct 1, 2016 10:00:09 GMT
If a borrower could foresee the eventuality of his personal guarantee being called in, how long would it take for him to squirrel away his house into the legal possession of a friend or relative?
In particular, would it be possible to instruct his solicitor to waive searches, which always tends to take a long time? Is there any reason why the conveyancing could not be achieved in a day?
Thanks, Mark.
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Post by mattygroves on Oct 1, 2016 10:20:15 GMT
If there is no mortgage then no conveyancing is necessary - just the completion of the correct forms for the Land Registry.
If there is a mortgage then that would need to be discharged first. If that involves relative (presumably spouse) or friend getting their own mortgage to pay off the existing one on completion then it will be a longer process.
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quidco
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Post by quidco on Oct 2, 2016 9:19:28 GMT
The asset would be taken back off the friend or relative by the creditors as you can't transfer assets to the detriment of creditors.
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skippyonspeed
Some people think I'm a little bit crazy, but I know my mind's not hazy
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Post by skippyonspeed on Oct 2, 2016 10:06:43 GMT
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mnm
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Post by mnm on Oct 2, 2016 11:04:54 GMT
Thanks mattygroves, quidco (& skippyonspeed, nice solution) - This is interesting. I am particularly interested in this in a PG (Personal Guarantee) security situation. The asset would be taken back off the friend or relative by the creditors as you can't transfer assets to the detriment of creditors. - Would the creditor be able to take back the offered security eg house/asset if it formed part of a promised PG. At present I feel I do not understand all the aspects of even this simplest of securities. mattygroves - If I read your reply correctly, the borrower who realize their 100% owned house/asset (offered as loan security via PG) may be called upon, will be able to quickly transfer that security (aided by reduced legal time constraints) to another person. They therefore have a greater chance of hiding this action from the lender - if the borrower were so inclined to take this action. This may be a moot point but - Could it be argued the borrower who does not fully own their house/asset offered as loan security and who realize it may called upon, will be less able to quickly transfer/hide the offered house/asset (via PG) from the lender due to the formal legal requirements and incurred time constraints. This borrower has a greater chance of being discovered (by the lender) trying to complete this transfer and so this borrower could be regarded as more secure for the lender (dependent on available equity). I presume the borrower with 100% ownership of their offered loan security has greater choice (& therefore more speed) of who they choose to transfer this loan security to. From what has been stated I assume not all non-fully owned house/asset transfers can take place to any willing chosen party as the chosen party would need to show an ability to service any ongoing payments that may be incurred by the house/asset transfer. Does this mean a transfer between husband & wife (for instance) may not be as easy as some may think? If a house/asset were in joint names would this alter/ease/hinder a full transfer from joint to single ownership. Finally - Is there any illegality in these transfer avoidance actions (with particular reference to PG)? Is there any significant consequences that may deter such an action by a borrower? If so, would it be the lender or the liquidator who make a decision as to whether there had been foul play & who would proceed with any legal action?
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Liz
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Post by Liz on Oct 2, 2016 13:34:15 GMT
Put simply "The piece of paper that a PG is written on, is about as useful as toilet paper" Remember that and you won't go far wrong.
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Greenwood2
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Post by Greenwood2 on Oct 2, 2016 15:02:53 GMT
Agreed, a PG is not secured against anything, although the PG givers apparent assets may be quoted. If the assets were secured (like a charge over a property) it wouldn't be a PG it would be tangible security. With a PG you are purely relying on how honourable the PG giver is, there have been some examples where PGs have been fully honoured (well done those people!), but usually at best a token payment seems to be the best you can hope for.
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Post by uncletone on Oct 2, 2016 19:19:06 GMT
Put simply "The piece of paper that a PG is written on, is about as useful as toilet paper" Remember that and you won't go far wrong. A little more exactly: "The piece of paper that a personal guarantee is written on, is useful as toilet paper". 
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skippyonspeed
Some people think I'm a little bit crazy, but I know my mind's not hazy
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Post by skippyonspeed on Oct 2, 2016 20:15:12 GMT
Put simply "The piece of paper that a PG is written on, is about as useful as toilet paper" Remember that and you won't go far wrong. A little more exactly: "The piece of paper that a personal guarantee is written on, is useful as toilet paper". Maybe pre-1960's, a bit too harsh for modern bottoms........could be used to wrap a particular brand of tea though!!!
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Post by uncletone on Oct 2, 2016 20:26:31 GMT
Maybe pre-1960's, a bit too harsh for modern bottoms........could be used to wrap a particular brand of tea though!!! You are addressing one whose toileting experience goes back to pre-1950's. May you be forever protected from the glory of "Izal"..... 😳
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Post by martin44 on Oct 2, 2016 20:27:48 GMT
A little more exactly: "The piece of paper that a personal guarantee is written on, is useful as toilet paper". Maybe pre-1960's, a bit too harsh for modern bottoms........ could be used to wrap a particular brand of tea though!!! Quite right.. and other 'stuff' too,  edit... them were the days.
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skippyonspeed
Some people think I'm a little bit crazy, but I know my mind's not hazy
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Post by skippyonspeed on Oct 2, 2016 20:46:21 GMT
Maybe pre-1960's, a bit too harsh for modern bottoms........could be used to wrap a particular brand of tea though!!! You are addressing one whose toileting experience goes back to pre-1950's. May you be forever protected from the glory of "Izal"..... 😳 I do remember Izal which I think was in unperforated roll form, I think we used Jeyes which was single sheet form in boxes folded like Kleenex tissue. Both makes had the same absorbity ie NONE........for the people who never had the experience, get some kitchen grease proof paper and try it!!!!
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mnm
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Post by mnm on Oct 2, 2016 21:05:15 GMT
What is the opinion of the P2P members of having more than one person offering a PG to underwrite the same loan.
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skippyonspeed
Some people think I'm a little bit crazy, but I know my mind's not hazy
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Post by skippyonspeed on Oct 2, 2016 21:56:00 GMT
On a very similar note....I bought a house in the 1980's through the usual legal channels. The couple I bought the house from were Aussies who wanted to move back home. Six months after moving in I had a knock at the door.........somehow they had been able to divert the cash straight to their bank own account and not told their mortgage company. A few months later one of my new neighbours did exactly the same!!!.......so they didn't squirrel their houses away.......they squirrelled themselves away!!!!
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Post by propman on Oct 3, 2016 7:56:14 GMT
Transferring an asset to escape a potential PG is fraud. The liquidator will always look for such activities, but proving it (especially if done some time before the loan goes bad) is difficult and it may not be worth pursuing. Directors will often be disqualified in such circumstances from being a Director again, although some use relatives to front other ventures to get around this.
If the house is occupied, it may also be difficult to enforce the guarantee even in the Directors name, often the best you can do is get a share of the proceeds when they sell. Charges over residences are thus less useful than over business premises or let properties.
In my experience, many Owner/Directors try really hard to raise cash to trade out of their problems. Part of this may well be giving an actual charge over the property to some other lender or extending their mortgage before the loans are defaulted leaving few assets to reclaim under the PG. Remember, more businesses collapse as a result of liquidity than profitability. So an owner will see the profits to be made while ignoring that they can't meet their liabilities in the time before they make this profit! When they are forced into a fire sale to meet liabilities, it is the discounts they have to give and costs of the sales that make the business insolvent.
- PM
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