How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask JGM Your Own Question
JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 10091
Experience:  30 years as a practising solicitor.
31090051
Type Your Scots Law Question Here...
JGM is online now
A new question is answered every 9 seconds

I need to borrow around £500k, I reside (tenant) in England.

Customer Question

I need to borrow around £500k, I reside (tenant) in England.
A wealthy American friend has offered to help as follows
Loan over 3 years, interest 1.5% per annum
I have a house in Scotland (freehold , no mortgage)
In view of the size of the loan I would like to give my Scottish house as security.
We have drafted a simple loan agreement where my friend is the lender and I am the borrower. under English law.
My friend will be transferring funds from her us COMPANY not her personal account into my uk personal account.
Based on the above information do you foresee any problems with this loan? The security (how would you go about giving this one) ? Risks for borrower And lender?
Many thanks
Emmanuel
Submitted: 10 months ago.
Category: Scots Law
Expert:  JGM replied 10 months ago.

There is no difficulty with the loan. A loan agreement can be an informal document and you can agree what system of law governs it. As far as the security over your house is concerned, the document has to be drawn up properly and in accordance with property law and registered in the Land Register by a solicitor. If that doesn't happen there is no valid security. Happy to discuss further.

Customer: replied 10 months ago.
Thank you.
Can the fact that the loan is between her and myself yet the money is being transferred from her usa business account be a problem down the line?
Many thanks
Emmanuel
Expert:  JGM replied 10 months ago.

No, I can't think why it would unless you have any specific concern?

Customer: replied 10 months ago.
am I right in saying that as the loan agreement is between her and myself it is binding in so far as us. But not binding in so far as her company is concerned. My point is should i ask for assurances that she has the authority to make this loan from her company account as worst case scenario could the company not turn around and say we never authorised this loan and as such any terms in our Loan agreement would be invalid ? Obviously this is all based on trust but one never knows in life!
Expert:  JGM replied 10 months ago.

If the loan agreement is between her and you, where the money comes from isn't your concern. That would be a matter between her and her company. Her company isn't loaning you the money.

Customer: replied 10 months ago.
I agree that on paper it is her but the money comes from her company. Worst case scenario, you are saying that the company would have no recourse against me? Could they not say, again worst case scenario, that The loan was not authorised and as such this money is now owed to them and must be repaid immediately ?
Expert:  JGM replied 10 months ago.

On paper is what is relevant. The loan agreement is between you and her.

Customer: replied 10 months ago.
worse case scenario, you are saying that the company has no recourse to me?
Expert:  JGM replied 10 months ago.

Yes, there is no contract between you and the company.

Customer: replied 10 months ago.
them sending the money constitutes what?
Expert:  JGM replied 10 months ago.

A transfer of funds.

Customer: replied 10 months ago.
Can they turn around and say they never authorised it ?
Expert:  JGM replied 10 months ago.

They can say what they like but that's nothing to do with the agreement you have with the individual. You have no contract with the company.

Expert:  JGM replied 10 months ago.

If you are concerned about this, refuse to accept the funds unless they are sent via her personal bank account. I don't think there's a problem but do that if you want peace of mind.

Customer: replied 10 months ago.
Registering the interest in the land registry would be the best way to secure the loan but would involve more legal costs. Is there a simpler option albeit not as 100%secure that i could offer the lender?
Expert:  JGM replied 10 months ago.

You could offer a personal bond but if I was the lender I would insist on a security. The cost is only about £400 plus VAT plus £60 to the Land Refister so it's not expensive when you consort the amount of the loan.

Customer: replied 10 months ago.
Personal bond? How could organise This? The registration, would my solicitor or the lender's do this?
Expert:  JGM replied 10 months ago.

A solicitor can draft a personal bond. Either solicitor can deal with the registration but the borrower usually pays.